Cost of living misery: Australians reach record average wage in the six-figure range
The average wage in Australia has reached six figures for the first time. The average worker now earns $1,923.40 a week, or $100,016 a year. Many once thought a six-figure salary meant you had “made it” in the corporate world, but these days, depending on where you live in Australia, it may just be enough to live on.
Finders financial expert Sarah Megginson said Yahoo Finance Many Australians are struggling to make ends meet as financial pressures such as record rents, high petrol costs and crushing interest rates continue to drive up the cost of living, meaning that once coveted income no longer stretches as far.
“There is no area of our daily living costs that has been spared from rising prices,” she said.
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“So I think no matter where you live, you would have been better off earning $90,000 three years ago than you would have been earning $100,000 today, because inflation has significantly exceeded normal levels during that time.”
“I definitely believe that a $100,000 income is no longer what it was imagined to be a few years ago.”
Which industry makes the most money?
The Australian Bureau of Statistics (ABS) announced this week that average wages rose 4.6 percent in May compared to the previous year.
For men, the average wage was $2,214.70 in the public sector and $1,978 in the private sector. Women earned an average of $1,995.30 in the public sector compared to $1,698.40 in the private sector.
The ABS also announced which sectors brought in the most money:
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Mining: $3,015.30 per week
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Information media & telecommunications: $2,437.20 per week
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Financial and insurance services: $2,283.20 per week
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Professional, scientific and technical services: $2,245.40 per week
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Electricity, gas, water and waste disposal: $2,243.80 per week
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Public Administration & Security: $2,036.10 per week
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Initial and continuing education: $2,026.40 per week
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Health care and social assistance: $1,902.40 per week
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Transport, mail & storage: $1,893.20 per week
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construction: $1,821.80 per week
The important aspect of “average” salaries
It is worth mentioning the difference between average and median when it comes to wages.
The ABS calculated the average salary based on all the available wages and given that there are some Australians who earn very high amounts of money, this can push the official figure up quite a bit.
The median wage, on the other hand, is the middle value in a data set and better reflects Australians’ salaries because it excludes these conspicuous outliers.
According to ABS figures released earlier this year, the median wage in Australia is $1,300 a week, or $67,600 a year.
For men, the median is $1,509 per week, or $78,468 per year, and for women, it is $1,130 per week, or $58,760 per year.
“I think it’s really fascinating when you keep that in mind,” said Megginson Yahoo Finance. “A lot of people see this and think, ‘Oh my God, the average wage is six figures. Does that mean that just because I make less than six figures, I’m way below average?’ That’s not the case.
“Most Australians live on wages well below that six-figure amount. I think that’s a really important distinction.”
How your salary can affect your lifestyle
If you live in an expensive suburb of Sydney, your six-figure salary may not stretch you far. It could be a different story if you live in a rural area of Australia and only pay a few hundred dollars a week in rent.
However, Megginson added that “lifestyle creep” can prevent people from using their money effectively.
Lifestyle creep occurs when your expenses increase as your salary increases, which can make you feel like there is never enough money in the world to survive.
“As your lifestyle becomes more demanding, your expenses and obligations also become greater,” she said Yahoo Finance“Most people think the more I earn, the better off I will be, the more financially secure I will feel. But this lifestyle change may simply mean increasing your spending.”
So what counts as rich if $100,000 is the average?
That depends on who you ask, but in a world where $100,000 is the average, a lifestyle of wealth is well above that mark.
Research from Finder found that Millennials need the most money to feel rich, at $418,325, followed by Generation Z at $392,077.
Baby boomers were the most conservative in their wealth estimates, believing one would need to earn more than $273,812 per year, while Generation X was in the middle at $307,257.
This amount averaged $345,819, which is three and a half times the average wage and more than five times the median salary.
“If we had done this research 10 to 15 years ago, I think hitting the $100,000 mark would have felt like we were saying, ‘Oh, you did it,'” Megginson said.
“I think there’s a real realization now that $100,000 sounds nice, but once you pay for living expenses, there’s not necessarily much left over, depending on where you live and what the cost of living is.”
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