A new report released today by the Centre for Social Impact, in partnership with NAB explores the complex reasons why many in Australia are facing increasing financial stress. Financial Resilience in Australia 2016 builds on the 2015 report to show that while people are more financially aware, savings are shrinking.
Financial resilience means having the ability to access and draw on financial knowledge and skills, adequate finances, suitable financial products and services, and other supports in the community when faced with an unexpected expense.
Now in its second year, the report reveals just how financially vulnerable many people are should they experience a financial shock such as a car repair or a higher than expected utility bill.
The report shows that one in eight adults in Australia, or more than 2.4 million people (12.6%) experienced severe or high financial stress during the past year, up from 11.1%. More than half (56.3%) felt some level of financial stress compared with 53.2% a year earlier. Less than one in three (31.2%) were financially secure, down significantly from 35.7% in 2015.
CSI Chief Executive Professor Kristy Muir said that there is a social and economic imperative that we act to ensure we’re addressing the root cause of financial vulnerability.
“Finance is critical. Even if you’re not driven by money, it determines where you live and the choices you’re able to make,” said Professor Muir. “We also know that economies fare worse when there’s a bigger gap between the richest and poorest people in society.
“Australia has enjoyed uninterrupted economic growth for the past two decades. Yet that’s in stark contrast to the experiences of many people because financial stress and vulnerability is on the rise. More people are finding it harder to pay the bills.”
Muir highlights the importance of collaboration between business, government and the not-for-profit sector to address this issue.
“How do we identify people in financial stress, ensure supports are in place before stress occurs and provide assistance when it’s needed?” she asks.
Fewer people are prepared for a financial shock with 14.2% of adults in Australia having no savings at all, compared to 9.7% the year prior.
About the Report
The findings are based on more than 2,000 survey responses, weighted to be representative of the adult population in Australia across age, gender and geographic location. All respondents were aged 18+ and completed the survey online in December 2016.
The survey was administered by Roy Morgan Research using OzPanel, a robust online consumer panel. OzPanel is unique in that the panel is primarily recruited via random, representative, address-based sampling from the Roy Morgan Single Source survey, which incorporates approximately 50,000 interviews predominantly face-to-face in both city and country areas each year with people aged 14+.
This project conceptualises the resources necessary for financial resilience around four components: