Time to read : 5 Minutes
Anxiety levels over energy bills, mortgages, and car and home insurance premiums have leapt up in Australian households over the last six months, according to Compare Club's latest Bill Stress Index report.
But, in a surprise finding, their research also suggests that Australians have taken control of their big expenses and are coping better financially, even though our overall stress levels are up - like everything else.
Overall, there’s been a rise of 19% in anxiety around paying our household bills.
You can read the full Bill Stress report here.
Why are households more stressed than six months ago?
The effect of thirteen cash rate hikes have well and truly been felt across Australia, with even high earners more stressed about mortgages.
But the bill causing the largest increase in stress across all ages, states, and income brackets (except $200K+) - is energy. When you consider some households will have seen their bills rise by around 29% since July, that’s not a surprise.
Energy bill stress is most keenly felt among Australians aged over 55 years, who are, overall, much less stressed and more optimistic about their finances than the rest of the country. The report also found that:
47% of Australians are now anxious about affording their utility bills, including electricity, gas, water, broadband - that's a doubling since May (23.4%).
Victorians are the most stressed about energy.
WA has the highest stress about mortgages.
25-44 year-olds, parents, and Low-Income Earners have shown the largest increase in financial stress levels.
More Australians than ever before say that over half their income is going on paying bills, with 71% of us cutting back on non-essential spending to afford them, up from 59% six months ago.
Anxiety about paying utility bills, including electricity, gas, water and broadband have doubled since May 2023, making this Australia’s most stressful bill.**
One stress to rule them all: Energy bills
“This time last year, the federal government was about to introduce their energy price cap, which had the effect of delaying bill stress until the end of the financial year. In July, for example, energy prices in NSW went up by around 29%, with some jumping even higher. You have to be seriously wealthy not to notice that impact.” Paul Coughran, GM Utilities & General Insurance
Whether you rent your home or own it, share your space or live alone, no one’s exempt from utility bill shocks.
Interestingly, the highest rise in stress around energy and other utility bills, comes from those who were relatively untroubled by these bills six months ago.
That’s likely because the events sending power prices upward haven’t changed since 2022. If anything, they’ve grown worse:
Supply issues due to the Russian-Ukraine war affected wholesale coal and gas prices last year - and that’s still happening.
Most of Australia’s gas supply gets exported, so energy retailers compete with global prices for our own gas. The more our gas costs our retailers, the more it costs you.
The transition to greener power means closing coal-fired power plants, further disrupting existing energy supplies.
Households with incomes over $75k have seen stress levels around energy bills rise by up to 266%, while parents have seen a 169% increase. Read more here to learn about the high squeeze that energy has put on middle Australia’s household budgets.
Overall, the survey reports a significant increase in people switching their utility providers, from 20% in May to 41% in November.
While energy and broadband services seem overly complicated, they’re actually some of the easiest services to switch. We recommend looking at all your utilities services at least once a year. Saving a few hundred dollars a year is worth a quick phone call.
Our top tips to get on top of your utility bill stress:
Fixing Rates: Consider locking in your energy rates to protect against price fluctuations.
Check for Rebates: Explore available government rebates and incentives that can help lower your utility costs.
Bill Smoothing: Utilise this option to spread out your payments evenly over the year, avoiding seasonal peaks.
What’s bill smoothing?
Rather than getting a bill each quarter and not knowing what you’ll be in for depending on the season, bill smoothing allows you to pay a set amount per month (which can be adjusted if your usage is less than what’s predicted.) This helps you avoid large, one-off bills, making it easier to manage your household energy budget. If your energy retailer doesn’t offer bill smoothing, switch to one that does.
What else keeps us awake at night?
Other bills causing us anxiety include:
Mortgages: 33% of people are stressed about this cost, up from 27% in May.
Rent: Up to 24% from 16%
General Insurance (car, home & pet): Up to 22% from 18%
Unexpectedly, our stress levels over health cover, car loans and life insurance have all dipped over the past six months, with the Index suggesting we’ve been switching, reducing or even cancelling policies in 2023. Cancelling cover may cut bill stress levels, but it also leaves too many of us underinsured.
And despite mortgage stress being the second biggest concern for Aussie households, fewer people said they switched providers compared to six months ago.
I spoke to Compare Club’s mortgage brokers about this and their take was that those homeowners who were able to refinance, have done so but those who haven’t, are stuck in mortgage prison because lenders aren’t willing to take on more high-risk loans.
The RBA says we’re coping - are we?
“Those who are coming off very low fixed-rate mortgages are managing quite well. All the indications from the banks and all we hear from the banks is these households are doing fine.” RBA Governor Bullock’s statement (December, 2023).
Hmmm…we’re definitely more stressed than we were six months ago, with 20% of us scoring higher on our bill stress scale.
And when you dive deeper, there’s a 35% increase in people who see half to three quarters of their income disappear to pay monthly bills.
Perhaps the strongest indicator of bill stress is that people aged between 35 to 44 are spending 75% or more of their incomes on monthly bills: a whopping 220% increase since May.
To cope with increasing bills, 71.63% of Australians have cut back on non-essential spending (up from 59% in May) and there’s been a slight rise from 50% to 56% in households actively budgeting.
There’s also been a steep decline in the number of Aussies seeking financial advice, while we’re 27% less likely to switch providers in search of a better deal - even though savings of up to $11,000 are possible.
Bottom line
It’s not a pretty picture mentally, but this month’s Bill Stress Index definitely suggests that we’re grimly organised when it comes to taking charge of our finances.
It also shows just how effective comparing and switching big bills can be. If you’ve not recently reviewed any of your insurances, loans, or utility bills, it’s worth taking a few minutes to see if there’s a better deal out there. It costs nothing and could be a few hundred dollars back in your pocket.
I’ll leave the last word on this to our CEO, Lance Goodman, who summed it up pretty well:
“Overall, the Aussie spirit of resilience is very much alive and well when it comes to our finances. In May, we were reeling, but by November, many households have proactively tackled the big expenses and have taken steps to cut back anything and everything. While nobody expects 2024 to be easy financially, the current Bill Stress Index suggests that when a bill becomes a problem, people take action, hence energy and general insurance still see strong levels of switching.”
