Aussie families are under a lot of financial pressure. In fact, households have not been in such a bad place financially for over a decade.

The Melbourne Institute household financial conditions index fell to 25.2 points in June, its lowest level since the start of the survey in March 2001. The March 2011 survey recorded an index of 33.3 points.

Robbing Peter to pay Paul is becoming the norm for many. Cost of living is continually going up. Recent price increases on everyday items including food as well as basic services have been squeezing many families budgets. Water, power and gas prices are going up in most states, while the summers floods restricted supplies of many fruit and vegetables with lingering effects for many produce costs.

The household financial conditions index shows the proportion of households who are saving relative to the proportion of households who are running into debt or drawing on their savings. The survey tapped responses from 1200 households nationwide.

People are trying to keep up their debt repayments, paying loans out whenever possible and saving more than in prior years. There is some kind of uncertainty in the air and whenever this happens, people revert to saving more and spending less.

Rainy day is possibly here

The most popular reason for saving quoted in a survey was for a holiday or travel, with 58.7 per cent citing this reason, almost level with March.

The second most popular reason for saving was for a rainy day or a precaution, with 55.4 per cent , down 0.2 per cent from March. The rainy day reading was the highest since the survey began including respondents motivations for saving in May 2005, the Melbourne Institute said in a statement.

The third most popular reason for putting money aside is for repayment of debt. People saving for this purpose  made up 46.0 per cent of all survey respondents, a jump from 41.6 per cent in the March survey.

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