According to the ME Bank’s latest study, Australian households are more inclined to save for the event of a pandemic.
ME’s Household Financial Comfort Report showed that for the first six months of the year, Australian’s financial comfort index increased by 3%, hitting 6.04 out of 10.
It’s time for you to save!
One of the highlights of the study was the substantial improvement in Australians’ comfort with cash savings, which also hit a record high during the period.
In fact, people who consider themselves “savers” saved more during the first six months.
This has resulted in a rise of savings households to 58% and an average monthly savings of $960.
However, 34% of households reported breaking even, while 8% reported spending more.
The average spender had $483 in total, which is the lowest level since Dec 2018.
The study revealed that only half of Australians were able to save in the past, while 40% spent their entire income. The 10% that did not save had more fun than the rest.
A higher percentage of Australians have saved more, which has led to a greater comfort level in dealing with financial emergencies. This is a new record.
Some Aussies remain vulnerable
ME’s consulting economist Jeff Oughton said despite the improvement of financial comfort in many aspects, many Australians are still vulnerable to sudden shocks that could result in income loss.
For example, around 21% said that they had less than $1,000 cash savings.
25% of households said they could continue their lifestyle even if they lost their income.
“Despite more households saving and an overall greater comfort with cash savings, there’s still a significant proportion of Australians that remain highly vulnerable to a loss of income,” Mr Oughton said.
“With pandemic lockdowns continuing to occur across Australia, households with low cash savings are at significant risk, especially in instances of extended strict lockdowns like we’re currently seeing in New South Wales, Queensland and Victoria.”
Improvement in labour conditions
Although the first half of this year has seen improvements in labour and employment conditions, it may not be true for all Australians.
41% of respondents believe that it would not be difficult to find a job within the next two months. Casual workers, however, make up about half of the workforce. They feel underemployed. They said they would rather work an additional 13 hours per semaine.
“Labour market conditions are a key reason that overall financial comfort has increased over the past six months, but paradoxically they’re also one of the leading drivers among households who said their financial situation has worsened,” Mr Oughton said.
Winners and losers are the biggest
In terms of financial stability, young couples, single-parent families, and retirees make the most comfortable groups.
Victoria and NSW, which both reside in the same region, had the highest levels reported of financial security.
Millennials and Boomers are more confident with their finances that Gen Xers (whose financial security has declined in the same time frame).
Financial comfort is also less for single parents who rely on government assistance, self-employed workers, and casual employees.
New financial habits
Another recent study by ME BankAbout 40% of Australians said they had changed their financial habits in order to avoid financial lockdown.
These new habits include less takeout and coffee, a savings plan, and tracking expenses.
Matthew Read, ME’s money specialist said that COVID-19 lockdowns have made Australians “financially-savvy”.
“We all know the lockdowns aren’t easy, and we’re once again being tested, but it’s great to see so many Australians’ working towards a healthy financial future,” he said.
