One question test to tell if you’re broke

 

Australians, according to the Australian Bureau of Statistics, are on the bones of their a*se. Broke. Forget the Barefoot Investor - more Aussies than ever are living hand-to-mouth.

The ABS does a big survey once every five years to see how Australians are going, and the results from 2019 just came out. It's not good news. This is all pre-COVID, mind you, so chuck a pandemic on top to imagine how they are now.

One way to figure out if someone's got no money is to ask if they could rustle up $2000 if they needed to. Do they have it in the bank, do they have a credit card, or could they borrow it off a mate if they desperately needed it? The ABS asks this question every five years and you can see the results in the chart below.

Almost 20 per cent of Australians can't rustle up the dough, which is a far higher proportion than in the past.

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Even before COVID hit almost 20 per cent of Aussies were already broke. Picture: Supplied.
Even before COVID hit almost 20 per cent of Aussies were already broke. Picture: Supplied.

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Could you get your hands on two grand with a week's notice?

Australia is supposed to be getting richer on average. But more and more people find themselves living on a knife's edge. One big trip to the dentist could send them over the edge. If their car breaks down, they're in trouble.

Of course, at the same time, our economy generates lots of wealthy people. In 2017-18, which is the last time the ABS measured it, Australia had 2.9 million households with a million dollars in net worth. That's a lot of millionaires. More than a doubling from 1.36 million millionaire households in 2003-04.

Also, 60,000 households had more than $10 million in net worth, up from 16,000 in 2003-04. That's how much you need to be safely inside Australia's top 1 per cent.

While Australia goes broke at one end and gets richer at the other, we're also getting cross.

The survey measures life satisfaction and it's heading down the toilet. Remember, this survey was done last year - before things went from bad to worse.

The average life satisfaction for all Aussies fell from 7.6 out of 10 to 7.5 out of 10. And as you can see from the following graph, satisfaction fell in most age groups. It fell among those of prime working age who are already the least happy, and also among the elderly.

The red bars shows that Aussies are less happy than in 2014. Picture: Supplied.
The red bars shows that Aussies are less happy than in 2014. Picture: Supplied.

This is pretty frustrating. Australia gets richer every year if you judge by the GDP. And our technology keeps advancing. And yet we're getting less happy. It's like all our efforts in pursuit of progress are in vain. The costs of our success - traffic, pollution, annoying middle management - are hurting us more than the benefits.

There could be a lesson here. Is it possible that an economy that makes some people rich and other people broke isn't the exact one that makes everybody happier? Something to bear in mind as we try to put society and economy back together again after this coronavirus crisis.

Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.

Originally published as One question test to tell if you're broke


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