Overseas holidays, new cars and having the latest technology aren’t considered luxuries anymore, but are standard lifestyle expectations of the new ‘average’ Australian, according to new research by MLC, the Australia today report.


Overseas holidays, new cars and having the latest technology aren’t considered luxuries anymore, but are standard lifestyle expectations of the new ‘average’ Australian, according to new research by MLC, the Australia today report.

It’s all about what we define as average, and it’s not so average anymore, with Australians’ perceptions of a middle class standard of living shifting significantly upward in recent decades. The majority of Australians now believe that being ‘average’, or middle class, means having a decent house, a professional job and children in private schools.

People also believe the average Australian should be able to afford overseas travel once a year and extra-curricular activities for their children, such as dance or music lessons.

From hills hoists to landscaped gardens

It’s a far cry from ‘average’ as our parents knew it: a fibro-cement or basic brick house, children in shared rooms, a kitchen with laminated bench tops and an upright stove. Back then, the concept of landscaping was the concrete path your Dad laid from the back door to the hills hoist, which stood proudly in the centre of the backyard. Family holidays were often a road trip or camping. If you went on a plane before the age of 18 you were considered pretty well off.

That was then. One generation on, we’ve rendered and extended our homes and installed stone bench tops in the kitchen. We’ve cut down the hills hoists and landscaped our backyards with sandstone bordered garden beds, but we’re out and about so often – holidaying overseas, dining out, or driving kids to extra-curricular activities – that we don’t often use them.

Ultimately we’ve redefined what we now perceive as the average standard of living – and it’s well above average.

Laura Demasi, Research Director at IPSOS who conducted the research for MLC, explains: “The way Australia’s middle class lives today is like the previous upper-middle of a generation ago. People have rolled lifestyle factors into what they now call ‘standard of living’ and are confusing the cost of living with the cost of quite an affluent lifestyle, such as overseas travel, kids’ dance lessons and private schools. Actually these factors are not standards of living, they are over and above those factors.”

The new ‘average’ net worth

So what do we think the new average Australian has today, in terms of assets?

Some believe the average Australian has assets of more than $1 million. Many also agreed you need an above-average salary to be considered middle class, with the consensus being you need a salary of at least $100,000 or more, potentially also be a white collar worker, have an investment property or the house paid off, and be living in a major metropolitan area.

We’re not rich, we’re all just average, aren’t we?

Interestingly, almost half of people surveyed considered themselves to be middle class when in reality only about 20% fit into this category.

Sixty per cent of high earners (approximate household income $145,000) and 56% of medium earners ($105,000) underestimate their position, believing themselves to be middle class. Large portions of those people who earn considerably less than these amounts consider themselves middle class.

We’re more consumerist than any generation before us

The research tells us we’re more consumerist than any generation before, placing more value on lifestyle characteristics, such as the latest technology and entertainment, than our parents did.

Half of respondents place more value on having the latest technology than their parents, 45% place more value than their parents on entertainment and almost 40% place more value on eating out weekly. Other factors important to Australians include the suburb in which you live (53%) and home renovations (38%).

“These expectations of lifestyle are a result of decades of elevated standards of living,” comments Demasi. “It’s an evolved perception of how we are and should be expected to live. It makes sense that people think that way – we’ve ridden the wave of prosperity and this is the result.”

Are we really better off than most?

But how does our standard of living really compare? Across many measures of wellbeing, Australia performs very well relative to most other countries as measured by the OECD Better Life Index.

Australia ranks above the average in housing, personal security, jobs and earnings, education and skills, subjective well-being, environmental quality, health status and social connections, but below average in work-life balance.

Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Australia, the average household net-adjusted disposable income per capita is US$31,588 a year, more than the OECD average of US$25,908 a year.

Good education and skills are important requisites for finding a job and in Australia, 76% of adults aged 25-64 have completed upper secondary education, close to the OECD average of 75%.

In terms of health, life expectancy at birth in Australia is around 82 years, two years higher than the OECD average of 80 years. Life expectancy for women is 84 years, compared with 80 for men.

In general, Australians are more satisfied with their lives than the OECD average. When asked to rate their general satisfaction with life on a scale from 0 to 10, Australians gave it a 7.3 grade, higher than the OECD average of 6.6.

We’re working longer, and living beyond our means

So what’s the problem, if any? In short, we’re struggling with cash flow, working longer hours and living beyond our means.

Forty-six per-cent of people surveyed said they’re living pay-cheque to pay-cheque to support their lifestyle, while 14% of employees work very long hours, higher than the OECD average, with 21% of men working very long hours compared with 6% for women.

An astounding 85% of people agree that people today live beyond their means. There are also longer-term impacts on retirement savings and confidence, which we will explore in upcoming articles.

In one decade, our perceptions of what comprises an average lifestyle have changed enormously and with that, so has the reality of Australian life. In short we’re living far more for today’s luxuries, than for tomorrow’s certainty.

What can you do?

Consider developing a household budget and reviewing what unnecessary luxuries you could take out that would make a big difference over the long term and may help with your financial security and retirement age. Engaging the help of a financial professional, through your bank, accountant or financial planner can help.

 This information has been provided by MLC Investments Limited (MLCI) (ABN 30 002 641 661, AFSL 230705).