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Do you feel like the wealthiest in the world?

By James McCay | 16 Nov 2018
4 min read

Swiss multinational investment bank Credit Suisse declared Australia has the highest median wealth per adult, overtaking Switzerland to come out on top1.

However, despite this report, many Aussies believe our standard of living is only moderately better than our grandparent’s generation and not much better than our parent’s generation2.

This sentiment is described in National Australia Bank’s (NAB) Consumer Behaviour Survey for the third quarter of 2018. On average, those responding to the survey believed they needed a gross household income of $102,000 to have a reasonable standard of living – which is $16,000 more than average full-time earnings3.

Roy Morgan, one of Australia’s leading market research companies, noted that in 2018, 32% of Australians believe the economy or related issues are the most significant problems facing the Australian government4. The biggest issues were financial concerns, the economy and cost of living, with unemployment close behind.

So, why are we so worried about the economy when we have the highest median wealth in the world? Well, let’s take a look.

It all comes down to the cost of living

According to the Australian Bureau of Statistics (ABS), the cost of living is rising and has been increasing steadily over the last few years. The rise in the cost of living is outlined below.

Income categoryIncrease in cost of living
Pension and government benefits recipients2.5%
Employed households2.3%
Self-funded retiree households2.0%

       Source: ABS Selected Living Cost Index June 2018

Australia can be an expensive country to live in. In fact, Sydney is one of the world’s top 10 most expensive cities[1. In 2017, the Australian Securities and Investments Commission’s (ASIC) Financial Attitude and Behaviour Tracker survey revealed 36% of respondents stated that dealing with money is overwhelming and stressful, while 24% said they felt like nothing they did made a difference to their financial situation2.

Compare the Market commissioned Deloitte Access Economics, a leading economics advisory practice, to conduct the Financial Consciousness Index, or FCI, to learn more about how conscious we are with our finances. According to the FCI, only two-fifths of Australians meet the threshold for basic financial literacy and capability3.

If you are interested in seeing how you rank when it comes to financial consciousness, take our quiz.

In the face of this pressure and the rising cost of living, it can be hard to believe that we are actually better off than we used to be. However, in 2017, Credit Suisse had Australia’s average wealth per adult at $528,0004. The 2018 figure is $571,743, which means that the average Australian adult’s wealth rose by $43,743. Average wealth is calculated based on income and valuable assets.

The good news doesn’t stop there. Unemployment has remained steady at 5.2%5, a six-year low, and average weekly earnings for those employed full time rose 2.7%6. Bearing in mind, not everyone is employed full time, and the rate of underemployment is higher at 8.3%7. The Federal Government has promised to reduce electricity prices, which will help ease household budgets as electricity bills become more affordable by 20%-25%8.

Despite the positivity, it can be hard to believe that Australians have some of the highest average wealth per adult in the world. Wages have increased only a little, with public sector salaries rising by 2.4% and private sector salaries increasing by 2%1.

The cost of living has been increasing steadily over the past few years, with households spending over $1,400 a week on average for goods and services2]. With the cost of living increasing again between April and June alone by 2.3% for employed households, it becomes clear why we don’t feel any better off.

[1] Wages rise 0.6% in the June quarter 2018. Australian Bureau of Statistics. 2018.
[2] Average Weekly Household Spending (a)(b), Australia, 2009-10 and 2015-16. Australian Bureau of Statistics. 2017.
[1] Worldwide Cost of Living Report 2018. The Economist Intelligence Unit. 2018.
[2] Australian Financial Attitudes and Behaviour Tracker. Australian Securities and Investments Commission. 2017.
[3] Dollars and sense. Compare the Market’s Financial Consciousness Index. Deloitte Access Economics, on behalf of Compare the Market. 2018.
[4] Global Wealth Report 2017. Credit Suisse Research Institute. 2017.
[5] Trend unemployment rate at six-year low. Australian Bureau of Statistics. 2018.
[6] May Key Figures. Australian Bureau of Statistics. 2018.
[7] Labour force, Australia, September 2018. Australian Bureau of Statistics. 2018.
[8] ACCC released blueprint to reduce electricity prices. Australian Competition and Consumer Commission. 2018.
[1] Global Wealth Report 2018. Credit Suisse Research Institute. 2018.
[2] NAB Consumer Behaviour Survey Q3 2018. National Australia Bank. 2018.
[3] Media Release. National Australia Bank. 2018.
[4] Cost of living, unemployment & poverty big issues before Federal Budget. Roy Morgan. 2018.

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Written by James McCay

James is an avid reader, loves medieval history and historical re-enactment, and the human to animal ratio at home is 2:4 (not including the dozen fish). James studied Creative and Professional Writing at QUT. When he isn't burying his head in a book or talking to his wife about history, he also enjoys making furniture out of reclaimed wood.

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