Australia, once celebrated for its economic resilience, is grappling with a cost-of-living crisis that has left millions teetering on the edge of financial ruin. Finder's June 2025 survey reveals a stark reality: 43% of Australians, 9.2 million people, have less than $1,000 in savings, with an average balance of just $215 for this group, barely enough to cover a weekly grocery bill. Nearly one in five (3.8 million) have no savings at all, living pay to pay. This blog piece explores the root causes of this crisis, its profound impacts on households, and why the same economic conditions, mass immigration, high inflation, housing unaffordability, wage stagnation, and inadequate policy responses, ensure the situation will deteriorate further without urgent structural reform.
The cost-of-living crisis stems from a confluence of economic pressures that have eroded Australians' financial security over the past few years.
Since 2021, inflation has hit multi-decade highs, peaking at 7.8% in December 2022 and remaining above the Reserve Bank of Australia's (RBA) 2–3% target into 2025. The Australian Bureau of Statistics (ABS) reports that essential goods, food, housing, utilities, rose 11–36% between March 2021 and March 2023. Groceries, a key pressure point, saw a 9.2% price increase in 2023 alone, with Finder noting that $215, the average savings for 43% of Australians, matches a typical NSW household's weekly grocery bill. Utilities (up 12.7%) and transport (up 7%) further strain budgets, as highlighted by the Australia Institute's 2024 survey, where 60% of respondents cited grocery prices as the primary cost-of-living concern.
Real per capita household disposable income has plummeted by 8% since mid-2022, the largest drop in recorded history, per the RBA's February 2025 Statement of Monetary Policy. Wages, while growing nominally by 4.1% in 2024, have lagged behind inflation, with 72% of Australians reporting slower wage growth than price increases. Lower-income households, spending 70–80% of income on essentials, are hit hardest, as they lack the financial buffers of wealthier households. The Centre for Future Work notes that this exacerbates inequality, with low-income earners facing "systemic" financial stress.
Housing costs, both rental and mortgage-related, are a major driver of financial strain. The Anglicare 2024 Rental Affordability Snapshot found only 0.6% of 45,000 rental listings were affordable for full-time minimum-wage earners, leaving 40% of renters worried about eviction. Mortgage holders face a 12-year high cash rate of 4.35%, with 48% of indebted adults (5.8 million) struggling to make repayments, per the Australian Securities and Investments Commission (ASIC). Finder's data shows 10.6% of mortgage holders have less than $1,000 in savings, amplifying vulnerability to rate hikes.
Government and RBA policies have failed to address root causes. The RBA's 13 rate hikes since 2022 aimed to curb inflation but crushed disposable incomes, particularly for mortgagors. Labor's tax cuts and energy subsidies in 2024 offered temporary relief, butthe household savings rate fell to 3.2% by September 2024, indicating no lasting impact. Meanwhile, housing supply shortages and speculative property markets remain unaddressed, with tax reforms like negative gearing reductions deemed politically contentious. This inertia perpetuates the crisis, as structural issues like low wages and housing costs persist.
The savings crisis has profound material, psychosocial, and behavioural consequences, pushing millions toward financial and personal distress.
With 43% of Australians holding less than $1,000 in savings, even minor expenses, a $500 car repair or a $600 dental bill, can trigger financial catastrophe. Finder's Sarah Megginson warns that such households risk "spiralling" into debt via credit cards or buy-now-pay-later schemes, which 6% of Australians have used for essentials. Food insecurity affects 53% of those under financial stress, with single parents (40% reporting insecurity) and women (19% skipping meals) hit hardest. The Salvation Army's 2025 Red Shield report notes 3.3 million Australians, including 700,000 children, live in poverty, exacerbated by rising costs.
Financial stress is a leading cause of mental health issues, per Beyond Blue, with 52% of Australians reporting increased stress, sleep loss, or accelerated aging due to money worries. Finder's 2024 survey found 33% lost sleep over finances, and 18% attributed physical signs like grey hair or wrinkles to stress. Women (62%) report higher stress than men (42%), reflecting gendered burdens like childcare costs. This "vicious cycle" of stress reduces productivity, straining relationships and exacerbating inequality, particularly for single parents and low-income households.
To cope, 87% of Australians are cutting spending, with 65% skipping healthcare, 53% buying cheaper groceries, and 51% reducing appliance use. Some work longer hours (4.6% more collectively in 2023), sacrificing health and family time. Others resort to risky measures: 6% plan to gamble or take on debt, per Finder's 2022 survey, highlighting desperation. These adaptations, while creative, underscore the absence of systemic relief, forcing households into unsustainable survival tactics.
The same conditions fuelling this crisis, persistent inflation, housing unaffordability, wage stagnation, and policy shortfalls, remain entrenched, signalling a bleaker future.
Despite inflation cooling to 2.7% in November 2024, essential costs continue to outpace wages. The ABS projects food and utility prices to rise 3–5% in 2025, driven by global supply chain issues and domestic droughts. With 76% of Australians already financially stressed, per Finder, and 90% worried salaries won't cover expenses, even modest price hikes will deepen hardship. The RBA's cautious stance, with no rate cuts until after mid-2025, maintains pressure on borrowers, further eroding savings.
Housing remains Australia's biggest cost-of-living driver, with no relief in sight, give runaway mass immigration. Property values rose 6.8% in 2024, per CoreLogic, and renters face 7.3% annual increases. The government's failure to boost supply or reform tax incentives like negative gearing keeps prices high. Finder's 2025 data shows 44% of Australians struggle with homeownership dreams, and 61% of renters have faced rent hikes, pushing more toward poverty. Without bold policy changes, housing will continue draining savings.
Wage growth (4.1% in 2024) trails inflation, and the Australia Institute's 2024 survey found 53% of households feel financially worse off than two years ago. Lower-income groups, renters, and single parents face disproportionate impacts, with 43% of renters holding less than one month's income in savings. The RBA notes that wealthier households dip into savings to cope, but low-income groups, with no buffer, face destitution. This growing inequality, unaddressed by current policies, will widen the savings gap.
Labor's 2024 tax cuts and subsidies have not restored savings, with the household savings rate at a historic low of 3.2%. JWS Research polling shows only 24% of voters approve of Labor's handling of cost-of-living issues, reflecting frustration with short-term fixes. Long-term solutions, housing reform, wage increases, or energy price caps like the UK's, face political resistance. The RBA's focus on inflation control over relief risks further rate hikes, which could "break" mortgage holders, per InfoChoice's Harrison Astbury.
Addressing this crisis requires structural reforms, but political and economic barriers loom large:
Immigration Control: The massive intakes must stop and immigration levels be reduced to historical lows, if not halted completely. We have had enough of immigration to last a lifetime!
Housing Reform: Increasing supply and curbing speculative investment via tax reform could lower costs, but negative gearing changes are politically toxic.
Wage and Income Support: Raising minimum wages or expanding income support would help, but the RBA warns of inflation risks from tight labour markets.
Energy and Food Relief: Grocery vouchers or utility subsidies, as suggested by the University of Melbourne, could alleviate immediate hardship, but funding constraints limit scale.
Financial Education: Finder's Richard Whitten advocates for high-interest savings accounts and budgeting, but low-income households lack surplus income to save.
Australia's cost-of-living crisis has left 9.2 million people with less than $1,000 in savings, vulnerable to financial ruin from even minor expenses. Inflation, housing unaffordability, wage stagnation, and policy inertia have created a perfect storm, with 76% of Australians stressed and 53% worse off than two years ago. The same conditions, persistent price rises, an intractable housing market because of mass immigration, and inadequate reforms, ensure this plight will worsen, pushing more into debt or poverty. While tax refunds ($15.3 billion in 2025) offer temporary relief, only bold structural changes, immigration control, housing supply boosts, wage increases, and targeted subsidies, can break the cycle. Without action, the "Australian dream" of financial security will remain out of reach for millions, with dire consequences for society's most vulnerable.