More than half of Commonwealth Bank customers saw their financial wellbeing improve rather than worsen in 2020, despite the economic challenges brought on by the COVID-19 pandemic.

The surprising statistic came from CBA’s Financial Wellbeing Scales research, which measures customers’ financial wellbeing based on their behaviour. This is done by measuring how well customers are managing everyday finances such as balancing their income, expenditures and debt, and how financially prepared they are for an emergency or a future goal.

The scales show that, between February 2020 (the start of the pandemic) and the end of November 2020, 52 per cent of people saw an improvement in their financial situation, 24 per cent had no change, and a further 24 per cent saw their financial wellbeing decline.

CBA General Manager Group Financial Wellbeing, Mo Khalil, said that though one in four people did decline, the fact that three in four were able to maintain or improve their wellbeing is an encouraging sign.

“The latest research indicates Australians’ observed financial wellbeing has increased from 47.2 points to 50.5 points between February and November 2020. The largest increase we have seen since we began measuring in 2018.

“This improvement is primarily driven by people spending much less than they earned over this period. While incomes did fall over this period, it would’ve been much worse if the short term government support and one-off stimulus measures weren’t in place to support Australians.

“In addition any fall in income was more than offset by large reductions in expenses over the same period as people spent much less during lockdown or used home loan and other payment deferrals provided by the banking sector during the pandemic.

“With the additional money people have had over this period of time, they have saved more and paid down debts. This is mostly because people remain uncertain about what will happen when support measures taper off.

“This is a relatively positive trend at the macro level as it suggests the government and industry interventions that have been put in place during the worst of the pandemic have worked as intended.

“However, there are still many Australians that didn’t fare as well as during COVID, including those on Government benefits other than JobKeeper and JobSeeker, and older Australians.”

According to the research, the number of customers receiving JobSeeker benefits had doubled between February and November 2020, and Australians receiving these benefits saw greater than average improvements in financial wellbeing through COVID. 

Mr Khalil said these increases in financial wellbeing may well be short term, and do not reflect how many people actually feel about their current situation given the uncertainty surrounding an economic recovery as the various COVID support measures continue to wind down.

“Maintaining the improved spending and saving habits customers exhibited during the pandemic will be an ongoing challenge as income support unwinds and opportunities to spend post-lockdown and through the Christmas season increase.”

About the FWB Index

The MI Observed Financial Wellbeing Scale is a world-first objective measure of financial wellbeing based on Australian’s spending, saving and earning.  This scale uses customers’ existing banking data to show any payment issues like dishonoured repayments. It helps identify spending habits, if they have a savings buffer and how much they could access in an emergency.