Financial stress study reveals consumer money habits

by Melanie Mingas27 Feb 2019

The spending and borrowing habits of everyday consumers in Australia have been laid bare in a whitepaper that reveals some worrying trends.

From undefined financial goals to savings and stress, the Financial Fitness whitepaper by Mortgage Choice and CoreData, has revealed that more than 18% of Australians save nothing from their pay packet and that while 26% set financial goals, only 20% clearly document them.

“It is no secret that a sound financial plan with defined objectives gives people looking to get financially fit a clear purpose and subsequently, peace of mind,” said Mortgage Choice CEO, Susan Mitchell.

In the survey, more than two in five respondents reported that they were embarrassed by their debt.

Household debt in Australia was rated the riskiest in the world in a 2018 Morgan Stanley survey. Although it says household debt is at a “tipping point” globally, Morgan Stanley’s research identified Australia, Canada, New Zealand and Scandinavia as the heaviest borrowers, and Australia as the most exposed economy when it comes to high debt levels.

As a result of their household debt, more than 50% of Australians say they feel financially stressed with 85% reporting that financial stress negatively impacts their wellbeing.

“A number of factors may be contributing to people’s level of financial stress resulting from the shame associated with debt, poor planning and a general lack of understanding of their financial situation,” Mitchell said.   

The survey also revealed Australia’s stress hotspots, with respondents in Queensland, New South Wales and Victoria claiming the highest levels of stress and wellbeing impact.

Hype Financial director Luke Cieslak, is one of many brokers who has been called upon to improve the financial fitness of a client before they can lodge a loan application. Recently, he spent nine months assisting one couple so they could qualify for a more suitable mortgage.

“The biggest relief for these clients was that they were quite literally liberated from the trappings of their situation; a problem that had grown to become a source of untold stress and mental anguish for them,” Cieslak told Australian Broker.

The clients were considering selling their home in order to clear ATO debts and pay down personal loans. However, the solution devised by Cieslak avoided this - and also saved them $30,000.

“What the royal commission reinforced is how important it is that people understand the broker proposition. Not just what the channel provides in general but really, as business owners we need to have a clear understanding of our value and what we do to help the everyday Australians that we interact with,” he added.