Saving bolsters financial outlook

SYDNEY - The financial outlook for Australian households is looking brighter than two years ago with debt reduction and saving cash higher priorities.

The ING Melbourne Institute Household Savings and Investment Report for the September quarter found that more than 53 per cent of households saved part of their income, up from 47.5 per cent two years ago.

ING Direct chief executive Vaughn Richtor said fewer households were running into debt and drawing on their savings.

"Considering Australians traditionally have had a poor savings record and we are a nation of great spenders, the news is encouraging," he said.

The report also found that saving for big-ticket household items climbed to 15 per cent in the September quarter from 8 per cent in the June quarter. "We've got to have the latest toys," Richtor said.

However, travel remained the number one reason for saving, with a record 45 per cent saving for a holiday, followed by saving for a rainy day and retirement.

Credit card debt and home mortgage continues to be the most common forms of debt.

The proportion of income used to service debt has worsened, with 21 per cent of households using between a quarter and all of their income to repay debts, compared with 17 per cent three months ago.

- AAP