There’s no end in sight for the cost of living in Australia – and our tax refund plans show how dire the situation is getting.
Getting tax refunds is usually a time for a little splurge – but this year looks very different as the Australian cost of living crisis hits households hard.
New research by comparison site Finder has revealed that many Aussies are now just scraping as inflation continues to climb.
In fact, an alarming 12 percent of us plan to use our tax refunds this year to pay household bills, while 41 percent, equivalent to nearly 8 million people, plan to put their refunds into savings — a huge jump of 35. percent per year. cents in 2021.
The survey also found that some will use their tax refunds to pay off mortgages and credit card debt, while others who probably don’t feel the rut like mush will use it to fund a vacation and go shopping.
Sarah Megginson, money editor at Finder, said it’s promising to see how much Aussies plan to save this year instead of putting out their tax returns.
“As the country faces an economic downturn, many Australians are experiencing more financial pressure than ever before. They want to use that extra money to pay off outstanding bills and debts,” she said.
“On the other hand, many of us have worked hard all year and hope to use the extra money to go on a much-needed vacation or for retail therapy.”
The survey found that a small percentage of respondents – 4 percent – will invest in stocks, buy now, pay off debt later (BNPL) or pay off a personal loan.
Another 1 percent will place it toward HECS debt, while 1 percent will invest in cryptocurrency.
Megginson reminded Australians that saving the extra savings is a great way to protect against unforeseen circumstances that may arise.
“We are in an economic crisis with rising household spending, people struggling to pay rent and mortgage payments, and utility bills doubling in certain states,” she said.
“I would encourage people to think very carefully about what they do with the extra money they get and consider using it to consolidate debt, get open bills, or put it in a savings account.”
Meanwhile, new Finder research also found that one in five Australian workers were counting on a pay rise this year, with households asking their employers for help when it comes to our cost of living.
According to the survey, 21 percent of workers expected a larger pay increase this year than they received in 2021 to offset rising inflation, which is expected to reach 5.5 percent by the middle of the year and 6 percent by the end of the year.
The nationally representative survey of Australian workers found that 22 percent of women and 20 percent of men expect a larger pay increase than usual, while 44 percent expect no pay increase at all and 30 percent expect a similar pay increase to what they received last year.
Worryingly, 5 percent of Australian workers expect a pay cut despite pressure on the cost of living.
Rebecca Pike, a money expert at Finder, said millions of households were on a budget.
“Inflation is uncomfortably high, which puts additional pressure on households still trying to bounce back after the pandemic,” she said, warning that high inflation could last for years rather than months.
“The rise in the price of borrowing will increase cost of living pressures for mortgaged households,” she continued.
“All of these factors have greatly intensified households’ need for more money and the first place they look is their salary.”
Ms. Pike urged workers to negotiate a pay rise at their annual review.
“There are now plenty of ways to cut costs to ease the pressure — from canceling streaming subscriptions to refinancing to a cheaper home loan,” she explains.
“Households can take radical measures to save money and protect themselves from further increases to inflation.
“Then any pay increase at work is the icing on the cake.”
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