Study finds 28 percent of Australians “financially unfit”
Bankwest recently released its 2010 Financial Fitness Index based on an online sample of 833 Australians. The survey measured 14 “vital signs” of financial fitness, including annual income, savings, insurance, assets, housing costs and debt.
Nearly 28 percent of respondents ‘had an over-reliance on debt, little or no regular savings, no insurance coverage and high housing costs relative to income’ (AAP 2010).
This represents a six percent rise from the survey’s findings at the same time last year.
Sixty-nine percent of respondents said that 2009 had been a difficult year for them financially, indicating that many people are still waiting to feel the effects of economic recovery.
‘About half of those surveyed reported borderline financial fitness, which included moderate savings, some insurance, average housing costs and moderate debt levels. Just 22 per cent were classed as financially fit, with regular savings, a range of insurance, low housing costs and high asset levels relative to debt and income’ (AAP 2010).
Young people continue to carry a heavier load of financial stress, with over one-third of young people aged below 30 struggling with money. The survey also revealed that women were especially prone to money struggles, classing almost one-third of female respondents as “financially unfit”, compared to approximately one-quarter of men. Young women in their 20s were also likely to be over-represented amongst the “financially unfit”.
The survey’s finding concurs with MyBudget’s customer profile. Almost 70 percent of MyBudget’s 6000 clients are women. Likewise, the median age of people seeking financial help has dropped significantly in recent years. Tammy May, MyBudget’s Director, blames busy lifestyles, consumer pressure and a lack of budgeting skills for the money troubles increasingly experienced by young people. “These days, people are constantly on the go—eating out all the time and paying for conveniences. Young people, especially young women, deal with social and financial pressures. They’re likely to be at the lower end of the income curve because their careers are just starting out, yet they’re also likely to spend a larger proportion of their income on clothes, housing and entertainment. Let’s also not forget that more women than men are single parents.”
The Bankwest study follows on the heels of research that shows that bankruptcy and personal insolvency (a term used to describe when a person can’t pay their debts), has grown by more than 250 percent since 1990. The most disturbing trend is that a rapidly increasing number of bankrupted people are managers, administrators and professionals who are currently employed. The implication is that insolvency is becoming a middle class concern.