Close to one in three Aussies is feeling the pinch financially, with money worries reportedly leading to sleep loss, conflicts in relationships, isolation, as well as a range of other things1.
These were the findings from the inaugural Financial Stress Index, compiled by global research firm CoreData on behalf of Aussie group, Financial Mindfulness, which indicated financial stress is not only being experienced by low-income households in 20172.
We check out some of the statistics from the research, what defines financial stress, and what steps you could put in place to potentially improve your financial position and overall wellbeing.
Findings from the research
Statistics from the Financial Stress Index revealed the following about financially-stressed Aussies3:
What defines financial stress?
According to the Australian Bureau of Statistics, there are two financial stress indicators—these include financial-stress experiences and missing-out experiences4.
Some examples of financial-stress experiences include:
Some examples of missing-out experiences include:
Actions that could help turn things around
Writing down what you earn, owe and spend could help you to create a workable budget, and at the same time let you quickly identify areas where you could be saving.
Even a small amount of cash deposited on a frequent basis could go a long way towards your savings goals. In fact, 41% of Aussies say they save just a little at a time5.
Credit cards are handy but they’ll often cost you as they typically charge high interest rates on top of the amount you’ve already taken out.
Over a 12-month period, Aussies will waste more than 4 million tonnes of food, which is enough to bridge the gap between Australia and New Zealand three times6, so it’s worth a thought.
Buying a car, going on holiday, and moving home all within a six-month period mightn’t be financially viable. Spacing things out and creating a manageable goals timeline might help.
This will help next time you bust your phone or need a last minute trip to the dentist. Plus, an emergency fund means you won’t have to rely on high interest borrowing options.
One in two Aussie couples admit to arguing about money7, so if you haven’t already, sit down and make sure you’re on the same page, and that both parties’ goals are being considered.
You more than likely have several product and service providers, and figures show you could save more than a grand annually on energy alone just by switching from the highest priced plan to the most competitive on the market8.
Whether it’s life insurance, income protection (which provides up to 75% of your income if you can’t work due to illness or injury), or contents insurance to cover items that may be lost, damaged or stolen, there are a range of insurances that could help should the unexpected happen.
The government’s Age Pension alone is unlikely to be able to cover a comfortable or even modest lifestyle in retirement9, so putting a little extra into super while you have time on your side could reduce the potential of further financial stress later on.
1 – 3 CoreData / Financial Mindfulness Financial Stress Index – 2017 full press release
4 ABS – Household Expenditure Survey, Australia: Summary of Results, 2015-16 paragraph 2, 3, 4
5 ASIC’s MoneySmart – How Australians Save Money table 1
6 Foodwise: Reduce Food Waste – Food Waste Fast Facts table 1
7 Finder – Heated conversations: 1 in 2 Aussie couples argue about finances paragraph 1
8 Mozo: Sick of high energy bills? Aussies willing to change providers could be saving over $1,000 a year paragraph 2
9 The ASFA Retirement Standard – June quarter 2017 paragraph 4
May 17, 2018
May 17, 2018
May 17, 2018
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Paul Baggetta is the Founder & Principal of Baggetta & Co (ABN 68 786 233 813).
Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.
Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.
Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.