Almost a third of Australian households are living from pay cheque to pay cheque and an astonishing 17% would struggle to find $500-$1000 to deal with an emergency – let alone make a down payment on a house - according to the BT Australian Financial Health Index.
The nationwide survey of 4,966 Australians conducted for the financial services specialist by professional services firm Ernst & Young, charts the state of the nation’s financial health and contains some interesting insights.
Data from the BT Index relating to household finances reveals a deep divide between those who are financially prepared to cope with current and future household expenses and those barely able to meet their everyday commitments.
Although 41% of respondents said they were able to meet their monthly expenses, a third admitted they’re worried about their ability to do so.
The Index also showed that Australians hoped for the best but didn’t always prepare for it.
BT general manager, Deanne Stewart, says the Index reveals what drives financial success but paints a mixed picture of Australians’ attitude to money management and planning for the future.
“The results of this survey show very clearly that there are a large number of people struggling to cope financially day-to-day – and the problems are not always linked to the size of the pay packet. In many instances, people are living in the hope that they will achieve their goals rather than planning for a fulfilling and secure future.”
She says Australians’ admission of living paycheque to paycheque occurs even amongst high-income earners.
The Index also confirms that Australians have become more conservative in their attitude towards debt, with more than half ‘always’ paying the full amount on their credit card and resisting the urge to meet expenses through credit.
Long-term, however, the story is a little different. Only one-third of respondents say they have developed a plan to meet their financial goals and the same number feel confident of having a financially secure retirement.
More than half say they’re unable to save as much as they would like, while 48% rarely or never make contributions to a super plan.
Stewart says the index indicates a ‘clear desire’ by Australians to gain more control over their finances, but that many are uncertain how to achieve this.
“Respondents generally felt they had their finances under control but 32% said they would like to have more control over the next 12 months…Very few people can confidently state how much they spend on food, utilities or even their mortgage.
Surprisingly, she says, 57% have no regular savings plan and this figure peaks amongst 45 to 54 year-olds.
From a gender perspective, women are marginally better savers than men with 44% of women putting money aside regularly against 42% of men.