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One quarter of Australians don’t have enough savings
The COVID-19 pandemic has been a defining event for everyone. It has impacted people’s livelihoods, social habits and finances in so many ways. In Australia, the pandemic has served as a wake-up call for people about how they manage their finances and how to prepare for their future.
In a survey undertaken by the Financial Planning Association (FPA) as part of Financial Planning Week, nearly one in four people said they were “somewhat stressed” by their financial situation.
If Covid-19 has taught us anything, it’s that we all need to save and invest more. The FPA surveyed 2,005 Australians to discover how the pandemic and consequent economic lockdowns had affected their work, income, financial habits and outlook.
The research was conducted by Pureprofile in August and September of 2021. According to the survey, the majority of Australians have reassessed their top financial goals over the next 12 months with 52.4 per cent focusing on hitting a savings goal, followed by going on a holiday 44.4 per cent.
Although it hasn’t been an easy ride many Australians are hitting a savings goal over taking a holiday for the year ahead as the country is on the verge of re-opening. That’s probably not what the economists and retailers want to hear.
The FPA survey also revealed that 35% of Australians said their “income and ability to work was affected by lockdowns,” while a similar total (34%) said they “did not have enough savings to get through lockdowns, or did not know.” Comparing that to the same time last year, it was only 11 per cent in a much stronger financial position, and 26 per cent have made some changes to their financial situation.
The research shows that the financial situation of many Australians has improved remarkably as people have shifted their focus towards achieving newly adopted financial habits, while also being restricted in their ability to spend.
The survey also said, “amongst the biggest changes made in response to the pandemic, the number one change people reported was to ‘be more frugal about my lifestyle choices’ (44.7% in 2021 vs 30.8% in 2020), followed by ‘increased my savings’ (43.9% in 2021); ‘paying down my debts’ (41.3% in 2021 vs 23.3% in 2020); and ‘created a budget to understand what I’m spending and saving’ (38.6% in 2021 vs 23.2% in 2020).”
Another interesting take-away from the survey was that more males had indicated that in hindsight they wished they had a financial plan in place – 11 per cent of males vs 9 per cent of females. A larger percentage of females indicated that they would not splash as much cash on takeaways and non-essential items – 16 per cent of males vs 21 per cent of females. And females prioritised making a budget: 43 per cent female vs 34 per cent.
Marking the start of the 21st Financial Planning Week in Australia (4-9 October), the FPA’s annual Money & Life Tracker: Freedom edition, provides a snapshot of the money and life issues Australians are facing 18 months since the COVID-19 pandemic started, how this period of time has impacted people’s financial situation, and what they have done to better manage their money.
Dante De Gori, CEO of the FPA, said: “Financial Planning Week is all about inspiring Australians from all walks of life and ages to consider their personal finances and find out how having a financial plan will give you greater peace of mind and security. This year’s edition of Money & Life Tracker has shown us almost a quarter of Australians did not have enough in savings to support themselves through the lockdown period.”
Research showed that while the financial challenges presented during Covid-19 have risen, those that had a financial plan in place were able to cope more confidently than those that didn’t. There has also been a rise in Australians seeking professional financial advice and having a financial plan in place. Some (6.5 per cent) used digital platforms to receive advice.
The message here is to encourage as many Australians as possible to take charge of their circumstances and explore how a qualified financial planner can really help them. In the same way you would seek legal advice from a lawyer, get regular health checks from a doctor, the FPA recommends seeking professional advice on your financial situation from a qualified financial planner.
