Majority of households struggling to save

The share of households saying their financial situation had improved rose slightly in 2012, but those who could not make ends meet were spending more over their income levels, according to the ME Bank Household Financial Comfort report.

"What's interesting is that the savings rate has gone up but the majority of Australians are struggling to save each month," said Jeff Oughton, chief economist at Melbourne consultancy Economics and Beyond, which helped prepare the report.

The household savings ratio was 9.3 in the year to June 2012, representing 9.3? saved for every dollar of disposable income. The savings rate has hovered around 9.5 since 2008-09 when the financial crisis hit, making consumers more wary of spending. Before that, the ratio was 3.7 in the year to June 2008, according to the Bureau of Statistics.

Households unable to save but able to make ends meet comprised 43 per cent of the 1500 homes the survey conducted in June 2012. A full 10 per cent of households were going backwards in their finances, drawing on savings, loans, credit or equity in their home. A minority, 47 per cent, were managing to save, the report showed.

Of those spending more than they earned, the amount spent over income rose from an average of $541 per month in October 2011, when the survey was last conducted, to $655 per month in June 2012.

"There are a lot of people under financial stress who don't have a mortgage and don't own a home," said Mr Oughton, who said the home owners ahead in their mortgages, referred to by the Reserve Bank, should not be confused with the overall financial wellbeing of households.

"The RBA looks at it, if you like, from a bank shareholder perspective," he said. "How about we look at it from a 'national interest' perspective, where a lot of people are under stress because they don't have homes, they don't have high levels of cash buffer and are worried about their superannuation savings too."

The improvement in financial comfort was attributable to a boost in confidence from lower income households through government handouts, Mr Oughton said.