Financial Wellbeing in Australia – is there a problem?

A 2019 CoreData Survey revealed some shocking statistics about Australian financial lives:

• 1 in 3 Australians are suffering from financial stress.
• 66% of those with financial stress said their money worries led to feelings of fear, depression and anxiety – 3 times higher than people unaffected by money problems.
• 23% are just getting by, 13% are struggling (Source: ASIC).
• Research on financial wellbeing in the Australian workplace found that, on average, financially stressed Australian employees lose 6.9 hours of productive work a week and are absent 4 days a year due to stress-related illness (Source: AMP Study).
• It is estimated that over the next 3 years, interest-only loans worth a combined total of approximately $360 billion will roll over to interest plus principal —meaning borrowers will face higher repayments.
• In 2019, the average Australian household debt was 189.7 times the average household’s disposable income – the highest level on record (Source: RBA).

One of the most surprising findings of the survey was that financial stress is not only experienced in low-income households. Respondents on salaries of up to $150,000 a year with investments of up to $750,000 were only marginally less financially-stressed than those who earned up to $90,000 with investments up to $350,000. It was also found that women are much more likely to be financially stressed than men.

Worryingly, these statistics have been made even worse by the COVID-19 pandemic. High level analysis by the Australian Bureau of Statistics (ABS) suggests that nation-wide there were approximately 480,000 fewer payroll jobs in STP-enabled businesses on 5 September 2020 than on 14 March 2020. Change in employment between 14 March 2020 and 5 September 2020 has been between 0.9-4.5% across every state except Victoria. In Victoria, there has been a 8.3% change in employment during this time.

In short – there is a BIG problem!

So what can employers do to support employees?

A number of initiatives, and/or responses to COVID-19, have already helped reduce employees’ daily costs including working from home (which has reduced travel costs) and relaxed dress codes (which has saved money on business attire). However, employers could do more by providing help with financial education.

Many employees need help with their money management in order to succeed. At FTA, we have developed a workshop which is designed to provide that guidance, and can be delivered face-to-face or virtually.

Please note: We do not give financial advice – we are not financial planners and are totally independent – but assist with helping employees to set financial goals for their personal lives, assess their current financial situation and develop a plan for working towards those financial goals.

In designing the workshops, we have also been mindful of the sensitivity of this issue for many and therefore ensure that individuals’ privacy is respected.

The interactive session includes a guide to developing a home budget, instructions on tracking income and expenditure (we recommend that participants do this for 2 weeks prior to the session), questionnaires regarding family finances and practical tips around increasing incomes and managing household costs – including energy, insurance and mortgage interest as well as information on apps and various websites offering advice on a range of topics.

There is a wealth of information available online, so why are so few Australians accessing it? One reason could be that they do not know where to start. Our hands-on, practical approach can help your staff take the first steps to getting their finances under control and on track to reach their own personal financial goals.

Virtual delivery

Sessions can be designed to meet your needs. We recommend a 90 minute virtual session, which includes quizzes and group discussions, but a longer session – half a day or even a full day – would allow participants to analyse their situations further and develop strategies. 

We would also be happy to contribute as part of a more extensive program with other independent advisers covering a number of other money management topics in more depth.

Please get in touch by heading to our Contact page, we would be happy to discuss the ideal solution for you and your team.