Tasmanians raid savings to cope with cost of living squeeze

A state-wide study by MyState Bank has found that over one in two (55%) Tasmanian adults say their savings have decreased over the past 12 months as a result of the rising cost of living.

Millennials (60%) reported the highest drop in savings, while 40% of renters said they have no savings at all. Just 12% of the population say their savings have remained unchanged over the past 12 months.

Commissioned by MyState Bank, the research conducted by YouGov* of Tasmanian adults revealed 87% of Tasmanians have been financially impacted by increased cost of living pressures over the past 12 months, with almost two in five (38%) reporting they have had to rely on credit or dip into their savings.

Claudio Mazzarella, General Manager, Everyday Banking & Marketing Division, MyState Bank said the research highlighted some alarming trends among people starting their property journey and renters.

“Cost of living is a national issue but the situation is particularly dire for Tasmanian’s on low incomes facing rental stress, or younger home owners, dealing with rising costs and one of the fastest interest rate rises in 30 years.”

Mr Mazzarella said among Tasmanian renters who have savings, three in four (75%) say due to the rising cost of living over the past 12 months, their savings have decreased.

“People facing the strongest financial pressures have no money left to contribute to their savings, and they’ve got little choice but to dip into their savings, or access credit.”

“Similarly, younger Tasmanians are three times more likely than Baby Boomers to say they had to take out a loan, or rely on credit to cover their day-to-day expenses due to the rising cost of living since November 2022.”

Mr Mazzarella said the research highlighted that the vast majority of Tasmanians have already taken steps to cope with the rising cost of living like pulling back on all non-essential spending.

“Almost four in five (79%) Tasmanians have cut back their spending including over two thirds (68%) who have cut back on their discretionary spending and over two in five (45%) have cut back on essential spending with a further quarter (24%) cutting back have on healthcare and their insurance spend.”

One area there was room for improvement was implementing a household budgeting system; a third (34%) of Tasmanians have no current household budget.

Generationally, Gen Z (48%) are the least likely to say they have a household budget compared to Millennials (65%), Gen X (74%) and Baby Boomers (67%).

“With almost nine in ten (87%) Tasmanians feeling the cost of living pinch, there’s never been a better time to create the family budget. A clear budget will reveal where your money is going and highlight areas where you can cut back,” said Mr Mazzarella.

When thinking about future strategies to manage their money in 2024, more than a quarter of Tasmanians plan to re-negotiate their insurance policies (29%), or build an emergency savings fund (26%), and one in five plan to re-negotiate utilities (23%) or get a second job/take on additional shifts/start a side-hustle (19%).

MyState Bank Cost of Living Tasmanian study key findings:

• 87% Tasmanians admit they have been impacted by the increased cost of living over the past twelve months.
• Nearly one in five (18%) renters have had to take out a loan, or rely on credit to cover their day-to-day expenses, which is more than three times as likely as those who own their home outright (4%), or are mortgage holders (7%) in response to the increased cost of living over the past 12 months.
• Over one in two (55%) Tasmanians have seen a decrease in their savings, with over one in four (26%) having decreased their savings a lot due to the rising cost of living over the past 12 months
• 80% of those with savings who have been impacted by cost of living pressures say their savings have decreased over the past 12 months.
• Half (50%) of Tasmanians have searched for ways to save money on everyday items, and a further two in five (40%) have sold unused items over the last 12 months to cope with the rising cost of living
• One in ten have started working a second job/ additional shifts/ part-time freelance work (11%), or increased their use of public transport (10%).
• Two in three (66%) Tasmanians say they have a household budget, including close to a quarter (23%) having started one to manage their spending due to the rising cost of living.
• Four in five (79%) Tasmanians are taking action to manage their money in 2024, with the top money management trends revealed as starting a budget/updating their existing budget to be more specific (41%).
• Over a quarter of Tasmanians plan to re-negotiate their insurance policies (29%), or build an emergency savings fund (26%), and one in five plan to re-negotiate utilities (23%) or get a second job/take on additional shifts/start a side-hustle (19%) to manage their money in 2024.

*YouGov was commissioned by MyState Bank to conduct this research. The study was conducted online between 8-13 November, 2023 and comprised a statewide representative sample of 523 Tasmanians 18+ . The data was weighted by age, gender and region to reflect the latest ABS population estimates in Tasmania.