More than a third of Australians are preparing to boost their savings with the extra cash from the upcoming stage 3 tax cuts, indicating a strong preference for financial prudence in response to economic pressures, according to NAB.
“Despite cost-of-living pressures, Australians have been prioritising their savings wherever possible over the last year or so,” said Paul Riley (pictured above), NAB personal banking executive.
Set to take effect from July 1, the stage 3 tax cuts will provide Australians with an additional $350 to $4,500 annually, a welcome relief as household financial stress hits an eight-year high. This financial boost arrives at a crucial time, offering some respite amid rising living costs.
New data from NAB highlighted that beyond saving, 29% of recipients plan to use their tax cut to manage the higher cost of living, while 22% will pay down debt, and 12% look to invest.
Only a small fraction, 8%, intend to spend on non-essentials. Particularly notable is the enthusiasm among younger generations and women, with 53% of Gen Zs and 39% of women planning to save.
As digital banking continues to rise, with three-quarters of NAB's deposit and savings accounts now opened digitally, household deposits have grown by 6.4% over the last year.
“High interest savings accounts can be a safe, smart, and stable way to manage your money, providing ready access to funds if they’re needed, as well as a rewarding interest rate,” Riley said.
The conservative approach to the tax cut benefits reflects broader financial trends, as fewer Australians are choosing to splurge, helping in the fight against inflation.
“Many Australians are also keen to use the money from these tax cuts to give their household budgets, which are under pressure from the cost-of-living crunch, some much-needed breathing room,” Riley said. “Fewer Australians are planning to splurge their tax cuts, which is welcome news in the fight against inflation.”
This cautious but strategic use of extra funds illustrates a mature engagement with personal finances, aiming to secure financial stability in uncertain times, NAB reported.
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