More than 2 million Aussies in financial stress

New research released by NAB and the Centre for Social Impact (CSI) at UNSW Sydney has revealed 2.1 million Australians are experiencing ongoing financial stress.

The Financial Resilience in Australia report released in early December 2018 also found:

• Just one in two Australians are prepared for a rainy day, with three or more months’ worth of savings to provide a buffer for unexpected costs;
• One in six Australians are finding it tough to meet the necessary costs of living;
• Australians in financial hardship are also paying the most to access small amounts of credit, with one in five reporting they had used high cost credit such as payday lenders.

Financial resilience is defined as being able to ‘bounce back’ from a financial shock. This includes having savings and access to appropriate credit, as well as support from family, friends, and community and government organisations.

“We know many Australians are finding it tough, and are unprepared for a financial shock such an unplanned bill or medical expense,” NAB’s Head of Financial Inclusion, Elliot Anderson, said.

“What’s particularly concerning is that the research shows that financial stress is not improving over time for many Aussies – it’s ongoing.”

On a positive note the research did find that, overall, more Australians are becoming financially resilient, with more than one in three Australians feeling financially secure (33.9% in 2018, up from 31.2 per cent in 2016).

CEO of CSI, Professor Kristy Muir said that the report plays an important role in understanding how different groups in Australia are experiencing financial stress.

“For a stronger society, we need to be asking ‘what can be done to improve financial resilience for everyone?’. This thinking will improve the way that our financial services organisations, governments, and not-for-profits help financially vulnerable Australians,” Professor Muir said.

NAB has worked in partnership with Good Shepherd Microfinance for the past 15 years to provide products, support and education to Australians who don’t typically qualify for bank products and services, to build their financial resilience and provide them with a safe alternative to payday loans.

“Through our longstanding partnership with Good Shepherd Microfinance, we are providing fair and affordable loans for Australians who need it most. These loans are for items such as a second-hand car, fridge or washing machines – items that can seem small but they make a big difference to people’s lives,” Mr Anderson said.

So far this year, Good Shepherd Microfinance has helped provide more than 30,000 no and low interest loans to Australians on low incomes.

“This research provides useful insights to help us better understand and support Australians in their financial wellbeing,” Mr Anderson said.

Read the report here: Financial Resilience in Australia