A new report, Financial Resilience in Australia, funded by the National Australia Bank (NAB), has shown that 2 million Australian are experiencing high financial stress.
The study shows the number of Australians experiencing problems paying debts, meeting the cost of living, accessing financial products and services and coping in difficult financial situations.
It further reflects that some Australians have trouble accessing social support in times of crisis and have low levels of financial knowledge, especially when dealing with unexpected costs and debts.
“Our research measured financial resilience by the four key resources that support it: personal economic resources (such as savings), financial products and services (such as insurance), financial knowledge and behaviour (including financial literacy), and social capital (having social support in times of crisis, including friends and families),” said authors Rebecca Reeve and Kristy Muir.
The results show that many Australians don’t have the financial resources they need to bounce back from a crisis. For instance:
- One in two adults have limited to no savings
- One in two only have a “basic understanding” of financial products and services
- One in ten have unmet need for credit and/or insurance
- One in five have limited or no social connections
- One in 30 stated they needed but did not have access to any form of government or community support.
“This has implications for the short and long-term impact on individuals and their families.”
“Our research found secure housing, steady income, education, being employed and good mental health are strongly associated with financial resilience,” said Reeve and Muir.
People with low levels of personal income fare poorly and financial resilience increases with level of education.
“Employment status is a key marker. People who are unemployed, underemployed, not in the labour force and those who only work odd jobs are more likely than their full-time employed counterparts to have lower levels of financial resilience.”
One key component of financial resilience is gender. The study showed the gender split was even overall with women experiencing lower general levels of economic resources than men, although men have lower levels of social capital than women.
Migration is also a factor, with lower levels of financial resilience experienced by people born overseas in a non-English speaking country.
“One in four study participants reported difficulties accessing financial services. The barriers are varied, but include cost, trust, poor and inadequate services, and (for a few) language, disability and discrimination.”
“This underscores the importance of making financial information, products and services more user-friendly and accessible. This will ensure these resources are available and accessible to everyone who needs and wants them in society.”
“The factors influencing financial security are not surprising. People who own their own homes, have a university-level education and have a personal yearly income of more than $100,000, for example, have higher levels of financial resilience.”
Overall, only a third of Australians are financially secure.
“The prevailing attitude around financial problems is that individuals are solely responsible for their situation. Our research challenges this ideas as it shows multiple aspects to financial resilience, some out of the individual’s control.”