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Australia, once hailed as the land of opportunity and the epitome of a fair go, is witnessing an uncomfortable shift in its socioeconomic landscape.
The middle class, once the backbone of the nation, is rapidly diminishing, raising concerns about a potential decline in our collective standard of living. The idyllic image of the quarter-acre block and the Aussie dream is fading, replaced by a growing cost-of-living crisis that is reshaping our society.
The middle class, once the backbone of the nation, is rapidly diminishing.Credit: Dionne Gain
In the heyday of Australia’s prosperity, the allure of a quarter-acre block symbolised so much more than just a piece of land. It encapsulated the promise that hard work, whether white collar or not would be rewarded with a comfortable lifestyle.
However, the harsh reality of today’s economic climate is currently painting us a very different picture. The middle class, once synonymous with stability and prosperity, is grappling with the stark reality of a shrinking existence – should we start looking towards the United States as a good predictor of where our middle class is headed?
The current cost-of-living crisis, made more painful by surging gas and electricity bills along with escalating mortgage repayments has pushed the middle class into uncharted territory. Consumer confidence is a key indicator of our economic health, and has plummeted to levels not witnessed since the recession of the early 1990s – which while unsurprising, is also terrifying.
The very foundation of the middle-class dream – financial security and a comfortable lifestyle – is under threat, and is starting to look a lot like the decline seen in middle America over the last 30 years.
It’s time to challenge the narrative that success is solely defined by homeownership or adherence to traditional milestones.
Despite this economic turbulence, the Westpac-Melbourne Institute consumer sentiment index (which was published in June this year) suggests a lingering optimism about the economy’s future. However, this optimism stands in stark contrast to the day-to-day struggles faced by the middle class, whose budgets are strained under the weight of the rising living costs.
Trying to pinpoint exactly what constitutes a financially comfortable lifestyle in today’s Australia is a relatively nuanced task. The constant debate about wealth and tax, exemplified by the ongoing discussions about stage three tax cuts, underscores the shifting landscape of affluence.
What was once considered a substantial income is now subject to scrutiny, with the definition of “rich” becoming a contentious point in political and community discussion. The median Australian employee earned $65,000 in 2023, according to the Australian Bureau of Statistics.
While this figure reflects a steady increase over the years, it fails to capture the widening gap between income and the soaring costs of living. A loaf of bread, which cost a fraction in 1975, has multiplied more than tenfold, mirroring the staggering inflation in housing prices over the same period.
If wage growth kept up with the growth our property sector has seen over the last 40 years, the average Australian would be on an income of $162,000. The dream of home ownership, a quintessential aspect of middle-class life, has become an increasingly elusive goal.
This increasing gap between income and expenses raises critical questions about future social consequences. Beyond the evident issue of unstable housing, there looms the spectre of higher crime rates, increased unemployment and a potential devaluation of education as individuals grapple with the economic pressures.
It’s also important to note that the nostalgia for an idealised version of the past middle class might be rooted in a cognitive dissonance – a misperception that blurs the lines between the reality of the top tiers of society and the true middle class.
Are we looking back on what the middle class of 1975 had with rose-coloured glasses? Middle class then meant meat and three veg every evening, no dining out and a single television in a household being a luxury. Today’s middle class, often made up of two working parents, faces a different set of challenges.
As we collectively navigate the ever-changing challenges of today’s world, it becomes even more important to reassess our expectations and redefine what actually constitutes a realistic lifestyle.
The rising cost of living, shifting employment dynamics, and evolving societal norms demand that we reset our expectations and aspirations, irrespective of whether we want to or not. Rather than fixating on outdated benchmarks that are no longer applicable, we should ask ourselves: what does a balanced and achievable lifestyle look like for me today?
The data paints a clear picture of the changing landscape, highlighting the widening gap between incomes and the costs of living which prompts me to question whether the pursuit of an idealised past is a sustainable path forward. The pressures placed on the middle class today to conform to outdated norms is overwhelming and, perhaps, counterproductive.
In contemplating this shift, it becomes crucial to redefine what constitutes a balanced and achievable lifestyle – because as I’ve yelled from many rooftops, you can have it all, you just can’t have it all at once.
Rather than adhering to antiquated benchmarks, our focus should shift towards holistic wellbeing, personal fulfillment and a sustainable work-life balance. The call is not to abandon your ambitions but to reassess and prioritise what truly matters in your individual, adopting a more realistic and adaptable approach to success.
The choice lies in acknowledging the constraints and opportunities presented to us in today’s reality and making a plan that aligns with the possibilities of the present, going beyond the constraints of generational expectations.
It’s time to challenge the narrative that success is solely defined by homeownership or adherence to traditional milestones – and start thinking about what personal success actually looks like on an individual level. What does it mean to you to lead a life well lived?
Victoria Devine is an award-winning retired financial adviser, best-selling author, and host of Australia’s number one finance podcast, She’s on the Money. Victoria is also the founder and co-director of Zella Money.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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