Failing the financial health test
21 July 2008
One in five Australians would not be able to cope financially if they found themselves unable to work for an extended period, according to a survey by the Commonwealth Bank.
A further third of respondents surveyed in the Financial Health survey said they would only have enough savings to last a month or so, if they lost their income through unexpected illness or redundancy.
The Financial Health survey, conducted at the end of the 07/08 financial year, asked 1,526 Australians about a range of financial management issues, including their ability to control risk, budget, save and use credit wisely to gauge the financial health of Australians in what is one of the most turbulent economic environments in recent times.
Ross McEwan, Group Executive of the CBA’s Retail Bank said, "In these challenging economic times, it’s now more important than ever for people to make informed choices and plan for the future."
Despite many people being more determined to save in the current economic climate (51%), the survey found that a significant number of Australians have no money set aside for unexpected expenses.
"One in three Australians would rely on their credit card to pay a large unexpected bill and just 51 per cent have money set aside for emergencies which may include significant home or car repairs," said Mr McEwan.
The Financial Health survey also uncovered a trend towards an over reliance on family and friends for financial advice.
"Nearly half the population (46%) turn to family members, and a quarter (24%) consult their friends for guidance on managing their money, with only 25 per cent regularly consulting a financial planner. On top of this, 36 per cent of Australians admit they don’t have a financial plan for the future.
"We know that many Australians understand the basics of good money management, but are struggling to put this knowledge into practice because they aren’t accessing qualified or specialist advice," added Mr McEwan.
Further to this, nearly one third (29%) of respondents find themselves struggling to have anything left to save at the end of the month, which may deter them from thinking they can plan for their future.
"There are some simple steps to get moving towards a more secure financial future, the easiest of which is to set a budget. To start with, this can be as basic as jotting down all of our expenses and looking at them against the salary you receive each month," said Mr McEwan.
"If you’re one of the 35% of Australians who already have a rough idea what you spend your money on, this should be an easy step for you. And if you already have a budget (45%), your next step would be to start talking to the experts, head into a Commonwealth Bank branch for a free financial health check or make an appointment with a financial planner. Or go online for a budget planner calculator - visit www.commbank.com.au "
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- Notes to editors:
The Financial Health survey included ten questions across four key dimensions of financial awareness: saving, credit control, risk control and future planning. These four categories represent the key areas of personal financial management.
Additional questions were asked around attitudes to saving in the current economic environment, self-assessment of their financial situation and where they turn for financial advice.
Six Simple Steps to A Secure Financial Future
CBA 'Financial Health' survey results