1 in 3 suffer financial stress, cut spending across the board
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Financial stress has hit its highest level since the height of the pandemic with almost a third of over-18s finding it difficult or very difficult to manage on their current income, research by the Australian National University finds.
Its quarterly financial wellbeing survey also found real incomes had declined and large increases in the number of people needing to renegotiate bills and cut spending on everything from major purchases to groceries.
The survey, which sampled 4,200 during August, found inflation was the driver of financial stress with 60.6 per cent identifying rising prices as a “big problem”.
Fewer people now thought prices would keep rising but “they are still feeling much of the pain”.
Elsewhere the gaps had widened between the haves and the have-nots, with more women now feeling financial stress than men, more young and middle-aged than the old, and more indigenous than non-indigenous. The less educated and those in disadvantaged areas had also become relatively worse off.
Overall, the survey found financial stress at a higher level than at any time since February 2020, with 30.3 per cent finding it “difficult or very difficult on their income”.
The result was more people were renegotiating bills and cutting spending than during the height of the pandemic.
“There have been very large increases in the per cent of Australians who renegotiated bills other than their mortgage, with 21.5 per cent of people saying they did so in the 12-month lead up to the August 2023 survey compared to 14.0 per cent for the January 2021 survey,” it said.
“There were also large increases in the proportion of people who spent less on groceries and essential items (increasing from 42.2 to 57.3 per cent), the proportion of people who cut back on non-essential items (from 38.5 to 47.4 per cent), and the proportion who postponed major purchases (from 44.6 to 54.0 per cent).”
The survey also found a decline in life satisfaction since the beginning of the year and an increase in psychological distress, with more unhappiness about where Australia was heading.
“At the start of the year, 73.9 per cent of Australians were satisfied or very satisfied with the direction of the country. This has declined to 63.8 per cent by August 2023.”
“Changes in financial stress and income were strongly associated with life satisfaction, psychological distress, and satisfaction with the direction of the country.”
This article was originally published on HR Leader's sister brand, Accountants Daily.