Finance Your Budget Are you rich, poor or somewhere in between?
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Are you rich, poor or somewhere in between?

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With Tony Abbott promising a tough federal budget, one that will spread the pain across all sections of the community, Australians are clutching their wallets wondering how much less they will have in the family kitty after budget night.

It’s also the time of year that words like ‘rich’ and ‘poor’ make regular appearances on the evening news, usually in reference to different groups in the community and how they will be affected by the government’s plans.

Case in point. Here is Tony Abbott on Monday: “This will not be a budget for the rich or the poor; it will be a budget for the country.”

But the story of who is rich or poor in Australia is a complicated one, no matter how hard politicians try to reduce it to a soundbite.

The complex reality

Australians were labelled the richest people in the world by Credit Suisse last year, but at the same time social services groups report that 2.6 million people live under the poverty line.

Property prices continue to rise, while on any given night one in 200 Australians is homeless. Families on six figure salaries struggle to afford a holiday and our capital cities are among the most expensive places on earth to live.

Australia might be a wealthy country by global standards but it also suffers from economic disparity, much like other developed nations. While Australia’s average household income is higher than the OECD average, there is a considerable gap between the richest and poorest – the top 20 per cent of the population earn six times as much as the bottom 20 per cent.

It’s also true that wealth is a matter of perception. What is comfortable for one person is desperate poverty for another. A small gain in income that sees one family jump a tax bracket and buy a new car might be a rounding error for a family a few suburbs to the east.

So where does each of us fit into the statistics? Are you rich, poor or otherwise?

The Australian Bureau of Statistics has data which helps each of us categorise our place on the scale based on a range of personal financial measures.

John Howard
A PM who had his own battlers. Photo: AAP

‘Battlers’

• Net worth: $31,205
• Income per week: $1101
• Owns a home? No 

From the ABS’s Household Wealth and Wealth Distribution findings we know that if your net worth group comes in at around $31,205, you rent from a landlord, have about $637 disposable income per week and pull around $1121 in gross income per week, then you are in the lowest group and likely to be considered “a battler”.

But the Aussie battler is a national archetype. What the group lacks in economic power, it makes up for with political sway. During the years that John Howard was Prime Minister, battlers were among the most important groups in the electorate. The so-called Howard battlers, working class voters who supported a conservative government, kept him in power for a decade.

In the middle

• Net worth: $437,856
• Income per week: $1606
• Own a home? Yes, likely 

In Australia, this is a large social group and in many ways defines the mainstream economic experience. Obviously, there are people either side of those numbers, living according their own versions of a middle class life.

Social statistician Bernard Salt has offered a biography of how the broad middle might be defined.

“Middle Australia can be conceptualised as a married couple in their early 40s with two children living in middle to outer suburbia who have a mortgage and where the man works full-time and the woman works part-time for a combined income of perhaps $110,000.”

The bottom line is that the middle class – around 18 to 19 million of us according to Salt – is, by definition, where most of us live our lives, emotional or otherwise.

Shutterstock

At the top

• Net worth: $2.215 million
• Income per week: $2894
• Owns a home? Likely 

If your net worth is around the $2.2 million mark, you earn $2874 a week in income, have about $1303 to spend each week and own your own home outright, then you are one of the upper class in Australia.

And the last decade has been good to you. In 2003-2004, the wealthy had a net worth of over $1.7 million, but that rose by $500,000, a 28 per cent gain. At the other end of the scale, the net worth of battlers rose from $30,439 to $31,205, a 2.5 per cent gain.

ABS
Source: ABS

With James Rose