Personal savings in homeland Australia are increasing ever more and at a faster speed than before. Usual trend these days has observed people voting to opt out of spending in the near term while keeping savings to induce more benefits in personal planning later on. These trends have been reported by ING Direct where people in Australia are moving towards curtailment of spending in favour of larger personal savings. This research has suggested that the reasons for savings growth are borne out of fear and apprehension after the recent economic crisis that affected US and European countries.
The segment of population saving from fear of economy wide restrictions and worsening situations is a major 53% while those saving due to greater earnings comprise at least 32% of the total households in the study. The indirect and direct effect of this important financial trend has been likened by many where the upper middle class with sufficient savings observed a growth from 10% to 15% of savings in the quarterly comparison from first quarter of 2011 to 2012. Citing the research report 34% of the respondents clarified about the urgent billing as being the major issue. On the other hand 59% of those who were surveyed have reflected that the reason for which they are saving more is the rising cost of utility bills – electricity, water, gas etc.
Redesigning personal finances to have more savings helps the families and households get a grip on credit card debts, savings for the future, mortgage payments, and avoiding the necessity of borrowing a personal cash loan or fast loans for the purpose of handling debts and fiscal emergencies. However this trend has negated the hopes of the tax collecting authorities who have less revenue in terms of GST tax collections and retail sales. Debt reduction possibilities hold more value in Australia than anywhere else. This is so since interest rates are among the highest while these are not expected to go down any further in the near future as well. The personal savings trend has been reported to rise continuously even before the global financial crisis had begun.
The trend in savings could enhance personal disposable income to aggregate high levels that are indicative of bigger spurt in consumer demand. In effect the current part of consumer demand suffers indicating slack business investments and leading to fears of the impending recession cycle. One can be sure of the exchange rate strengthening against US dollar as also the current interest rates but the aspect of deductions holding tax benefits for the coming future is indeed a debatable one. The ability of the finances to take care of themselves following the adage “a penny saved is a penny earned” is more apt in storybooks.
While we figure a way to assure ourselves of the situation being a fragment of what global financial crisis had been one cannot be too self-satisfied. One can argue that personal disposable incomes and savings would lead to less investment and therefore current demand would be as much difficult to gather in the coming years. Yet the prospect of savings being high on personal finances is more a top priority and requirement of millions of households.