Households keen to build savings

Almost half of Australia's households are putting some savings away each month and many would like to be saving more.

According to ME Bank's latest Household Financial Comfort Report, in December 47 per cent of households said they were saving each month, compared with 46 per cent in June last year. Among these households, the average saved each month rose five per cent to A$770.

The proportion of households that typically spend more than their income each month fell from 12 per cent in June last year to nine per cent in December, with the average amount of over-spending falling four per cent to $480.

The proportion of households that said they were confident that they had enough emergency savings to maintain their lifestyle if they lost their income for three months rose from 38 per cent in June to 46 per cent in December. The proportion that was not confident fell from 50 per cent to 42 per cent over the same period.

While the savings trend is positive, the level of savings remains a major concern for households. After "cost of necessities", "level of savings/cash on hand" was biggest overall worry.

Twenty-nine per cent of households reported that they had "cash savings" of $1000 or less, 56 per cent reported that they had cash savings of $10,000 or less and 16 per cent reported that they had cash savings of between $10,000 and $30,000.

The proportion of households with increased debt rose from 30 per cent to 32 per cent, while the proportion whose debt was lower fell from 26 per cent to 22 per cent.

ME Bank said low interest rates, higher incomes and the rising value of investments had made households more comfortable with debt.

These factors also contributed to higher overall financial comfort levels. ME Bank said the index rose eight per cent to 5.78 out of 10 - its highest level in the three-year history of the survey.