- Despite the pandemic, Aussies are feeling financially better off than ever
- 16% fewer Australians are living paycheck to paycheck compared to a year ago
- Australia has done relatively well with Covid, enjoyed government support and low interest rates
Despite a once-in-a-century pandemic, the financial well-being of Australians has hit an all-time high, according to a new CBA (Commonwealth Bank) report.
Data drawn from 5 million CBA customers over the past year, has delivered a score of 51.1 out of 100, the highest since the Commonwealth Bank’s Australian Consumer Financial Wellbeing was first calculated in 2017.
Various elements go into the index: the degree of financial freedom, control, security and ability of Australians to pay their bills and meet their financial obligations.
16% fewer Australians are living paycheck to paycheck as compared to a year ago, and the rating itself has risen at the sharpest level since records began.
“While clearly there are people struggling or worse off from the pandemic, more Australians feel better off, more financially secure and more in control of their finances. Spending less, saving more and paying down debt have been the big stories from this past year.”
CBA Executive Manager Financial Wellbeing, Ben Grauer
“Our research shows customers’ financial wellbeing is more closely linked to their financial behaviours, rather than how financially knowledgeable they are or how much they earn,” he said.
Why feeling richer?
Part of the reason for this result could be a feeling that Australians have done relatively well during the past year, with fewer Covid cases, and with some generous government support through JobKeeper and JobSeeker.
Lower interest rates have meant average monthly mortgage repayments have fallen, which can often be a significant part of the household budget.
“These factors combined have been beneficial to Australians’ financial wellbeing, as they have allowed people to reduce their expenses and spending, and save more – thereby providing them with greater economic security at a time of widespread international insecurity and instability,” said Professor John de New from the Melbourne Institute, University of Melbourne.
Australians’ median annual savings balance increased by $1,115, as people stashed away cash, and adjusted their spending patterns in 2020/21.
“With total employment and other macro-economic indicators almost back to their pre-pandemic levels, this increase in savings buffer, prudent behaviour and associated improvement in financial wellbeing will serve Australians well to deal with future challenges as the economy continues its recovery.”
Professor John de New from the Melbourne Institute
Fewer Australians are struggling financially, with the Scale recording a 5.5% point drop in the proportion of Australians considered to be ‘just coping’ or ‘having trouble’.
“Pleasingly, we also recorded improvements across the top two categories in the financial wellbeing scale, including a 6.5 per cent increase in those Australians considered to be ‘getting by’; and a 28.3 per cent increase in those who were ‘doing great’,” Mr Grauer said.
Australian Consumer Financial Wellbeing Report, published by CBA, May 2021.