There’s no end in sight to Australia’s cost of living crisis – and our plans for our tax refunds reveal just how dire things are getting.
Getting a tax refund is usually a crazy time, but this year things are very different as Australia’s cost of living crisis hits households hard.
New search by comparison site Searcher revealed that many Australians are coping now as inflation continues to soar.
In fact, an alarming 12% of us plan to use our tax refunds this year to pay household bills, while 41%, or the equivalent of nearly 8 million people, plan to hiding their repayments in their savings – a whopping 35% cent jump in 2021.
The research also found that some will use their tax refund for mortgage payments and credit card debt, while others who probably won’t feel the pinch as porridge will use it to fund vacations and go shopping. shopping.
Sarah Megginson, money editor at Finder, said it was promising to see how many Australians were considering saving instead of splurging on their tax returns this year.
“As the country heads into an economic downturn, many Australians are under more financial pressure than ever before. They are looking to use that extra money to pay bills and unpaid debts,” she said.
“On the other hand, many of us have worked hard throughout the year and are hoping to use the excess funds for a well-deserved vacation or retail therapy.”
The survey found that a small percentage of respondents – 4% – would invest in stocks, pay off buy now, pay off debt later (BNPL) or pay off a personal loan.
Another 1% will invest it in HECS debt, while 1% will invest in cryptocurrency.
Ms Megginson reminded Australians that storing extra savings is a great way to protect against any unforeseen circumstances that may arise.
“We are in an economic crisis with skyrocketing household spending, people struggling to pay rent and mortgage payments, and energy bills doubling in some states,” he said. she declared.
“I encourage people to think very carefully about what they do with the extra money given to them and to consider using it to consolidate debt, pay any outstanding bills, or put it away in a savings account. saving.”
Meanwhile, new Searcher Research has also found that one in five Australian workers are counting on relief from wage increases this year as households look to their employers for help with our cost of living crisis.
According to the research, 21% of employees expected a bigger pay rise this year than in 2021 to offset soaring inflation, which is expected to reach 5.5% by mid-year and 6% by the end of the year.
The nationally representative survey of Australian workers found that 22% of women and 20% of men expect a higher than normal pay rise, while 44% don’t expect one at all. salary increase and 30% expect a similar salary increase. what they got last year.
Worryingly, 5% of Australian workers expect a pay cut despite cost of living pressures.
Rebecca Pike, money expert at Finder, said millions of households are on a tight budget.
“Inflation is uncomfortably high, putting additional pressure on households still trying to recover from the pandemic,” she said, and warned that high inflation could last for years, not for years. month.
“Rising borrowing prices will intensify the pressure on the cost of living for households with mortgages,” she continued.
“All of these factors have greatly intensified households’ need for cash and the first thing they look at is their paycheck.”
Ms Pike urged employees to negotiate a pay rise during their annual review.
“There are plenty of ways to cut spending right now to ease the pressure — from canceling streaming subscriptions to refinancing to getting a cheaper home loan,” she explained.
“Households can take drastic measures to save money and protect themselves against further increases in inflation.
“So any pay raise at work is the icing on the cake.”
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