August 24, 2016

Media release: two million Australians under severe financial stress

The Centre for Social Impact (CSI) has released a report today that - in an Australian first - defines 'financial resilience' and reveals that 2 million Australians are experiencing a high level of financial stress or vulnerability.

The report Financial Resilience in Australia 2015 highlights the concept of resilience as a process that 'enables individuals to bounce back after adverse events and experiences, adapt to changing circumstances, and deal with environmental stress.' The report defines financial resilience as:

‘the ability to access and draw on internal capabilities and appropriate, acceptable and accessible external resources and supports in a time of financial adversity’.

Over the past five years CSI and National Australia Bank (NAB) have worked in partnership to understand the level of financial exclusion in Australia. Over the past year, the two organisations have sought to redefine thinking beyond access to products and services and to provide a more robust and holistic approach to defining and measuring the level of financial health in Australia.

According to the report authored by researchers at the Centre for Social Impact, based at UNSW Australia, financial resilience is characterised by four components:

  1. Economic resources
  2. Access to financial products and services
  3. Financial knowledge and behaviour
  4. Social capital

“We know that just over 64 per cent of Australian adults are facing some level of financial stress and vulnerability and that one in four people have experienced difficulties accessing financial services in the past 12 months,” said Professor Kristy Muir, Research Director at the Centre for Social.

“We have redefined thinking around financial inclusion and developed a comprehensive model of resilience that can be applied across the entire population – because financial shocks can happen to anyone, anywhere at any time,” said Professor Muir. “This gives us a much deeper understanding of people’s financial situations, the resources they need to withstand adversity and who in the population fares better or worse – and why.

“Understanding financial resilience provides a clearer understanding not just for individuals, but for socially responsible businesses, government agencies and policy makers, and anyone working with a mission to improve social outcomes, to identify where people are at risk and provide the right solutions, under the right circumstances at the right time.

“To write this report, we surveyed a representative sample of the Australian population and what we have found is alarming – 2 million Australians are financially vulnerable, and people most likely to fare worse are people living in social housing, with mental health challenges, and/ or English as a second language or who don’t speak English at all,” said Professor Muir.

According to NAB’s GM of Corporate Responsibility Jodi Geddes, “Helping customers better prepare for life’s little and big surprises is an important part of what we do.”

“This research will help the general population better understand what they can do to improve their financial resilience and will inform an evaluation tool to help organisations better evaluate their programs aimed at addressing financial inclusion.” Ms Geddes said.

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