The latest results of a quarterly household financial wellbeing index reveal that many Australian’s are struggling between pay days and are forced to use credit cards to tide them over.
Direct savings bank ING Direct released the index last week, with results showing that 64% of Australian households have been strapped for cash between pay days, and one in three saying they use a credit card to fill the gap.
Almost half of all respondents (46%) stated they would need at least an extra $300 a week to be comfortable with their take-home pay.
The financial wellbeing index is shared with ING Direct’s financial planning partners, and spokesperson David Breen told Wealth Professional
that the insights are a good indicator of what’s going on within any planner’s client base.
“We regularly read about interest rates, currency and unemployment data but these insights are a really good indicator of what is happening at a household level,” he said.
The results also revealed that the top ways in which Australian’s dealt with the shortfall in money were to stay at home instead of going out (57%), by cooking cheaper meals (49%), having to dip into savings (35%), and by relying on a credit card until payday (33%).
Given the prospect of a 5% pay rise, 82% of those surveyed said they would use the money to grow savings or pay down debt.
Breen said this shows that many Australian’s financial attitudes are changing.
“Actually we believe that households are feeling the pinch because they are already incorporating savings and the repayment of debt into their regular commitments, and this shows a real shift in financial capability,” he said. “When we asked people what they would do with a 5% increase, 82% said they would save in some way. I think this proves there is certainly a different outlook, particularly post GFC.”