Just under $80,000 a year is enough, say most families

Most families with at least one child say they are ‘comfortable’ with their finances at just under $80,000, according to latest figures from the Melbourne Institute of Applied Economic and Social Research. Flickr, Meredith Farkas.

Most families say they would feel comfortable living on an annual household income of just under $80,000 according to new figures from the Melbourne Institute of Applied Economic and Social Research.

However, in a reflection of how the 2008 global financial crisis was just starting to sting when the data was collected, the Institute’s latest Household, Income and Labour Dynamics in Australia (HILDA) Survey records more people reporting they felt ‘poor’ or were ‘just getting along’.

The longitudinal survey, which is funded by the Australian government and produced annually, is based on a series of interviews with the same 7000 households conducted yearly between 2001 and 2008.

The survey showed that, in the latest round of interviews, one-child couples were more likely than not to say they were satisfied with their financial situation if their income was above $78,543.

Couples with two children needed $77,263 after tax to be more likely than not to report being satisfied, and single parents with two children required at least $71,813.

The latest data follows the Federal Government’s announcement last month it would limit tax breaks to families who earn more than $150,000, a move that incited hot debate about the definition of ‘wealthiness’ in modern Australia.

The HILDA survey shows most families would feel satisfied on an income well under $150,000.

The survey also recorded a rise in the number of people reporting they felt ‘poor’ or that they were just getting by.

“Up until 2007, there were slight increases in the proportions of people reporting being ‘prosperous’, ‘very comfortable’ or ‘reasonably comfortable’,” said survey Deputy Director, Associate Professor Roger Wilkins.

“However, in what’s probably a reflection of the early effects of the global financial crisis that began in late 2008, our figures begin to show a reverse of this sentiment.”

“Overall though, approximately 40% of individuals never perceive themselves as being ‘poor’,” he said.

“So 60% report that, at some point in at least one of the eight years between 2001 and 2008, they and their family were either ‘just getting along’, ‘poor’ or ‘very poor’.”

The survey also recorded that involuntary job dismissals have dropped from just under 5% in 2001 to almost 3% in 2008, with men 30% more likely than women to be dismissed.

However, the latest survey results do not reflect the many job losses that occurred as a result of the global financial crisis because it is based on data collected up until late 2008 (when the crisis was just beginning to develop).

“Preliminary analysis of the 2009 data does show a large rate of job dismissals in 2009,” said Associate Professor Wilkins.