We’ve all read the grim statistics. Just a third of Australian adults feel they’re financially secure. Half of us have less than three months’ worth of income, the minimum amount recommended for emergency savings. One in seven Australians have little to no savings at all. We’re a country in financial crisis, but who are the ones in debt, and what toll does their financial insecurity take? The Conversation recently set to find out with the nation’s first widescale study of financial hardship.
For their research, The Conversation spoke to 1,101 Australian adults who couldn’t pay a debt on its due date within the last two years. The group was made up of 480 wage earners, 402 Centrelink recipients, 76 people who received a wage and Centrelink payments, and 143 people with alternative income sources like their own business or superannuation. The publication admits its research has its limitations, noting that young people under 25 and non-English speakers were underrepresented. However, the study gives a clearer picture of what financial insecurity really looks like.
The research busts the persistent myth that people face financial hardship because they make bad choices. Most people surveyed were employed and more than a third of the wage recipients had at least a bachelor’s degree. Unemployment and underemployment were the most common causes of financial hardship. Physical and mental health concerns also played a part for many people. Addictions to gambling, alcohol, and drugs were less common contributing factors.
Respondents said their debt negatively impacted their health, relationships, and involvement in their community. Many said debt was a barrier that made looking for work or completing education difficult.
The respondents aimed to escape debt by reducing their spending in all areas. While luxuries were the first to go, households also looked for ways to cut their bills for food, utilities, medical expenses, and transport. Only slightly more than a third of respondents turned to family members or friends for financial support.
While consumer protection laws allow Australians in need to negotiate payment plans and other hardship variations with banks, phone companies, and utility providers, just a quarter of respondents took advantage of these offers.
The Conversation’s research shows financial hardship can impact Australians from all walks of life, no matter their income, education, or employment. If you’re struggling with debt or a lack of savings, we can help. Call us on 1300 854 833 to learn how we can help you turn your finances around.