Armchair economists divided on their financial futures – food and grocery spending being cut back
‘Armchair’ views on the economy.
Australia’s army of armchair economists will need reassurance from the incoming Government as new research released today finds only 25% of Aussies feel optimistic about their household finances when considering the state of Australia’s economy.
The research, commissioned by Australia’s leading specialist life insurer TAL for financial literacy campaign MoneySmart Week, found 28% of people are pessimistic about the state of their finances based on their knowledge of the economy.
The vast majority of all Australians (87%) admit to having taken serious steps to take better control of their money, with a surprising 32% having reduced their spending on food and groceries (40% for lower income families), 21% setting a firm budget for groceries and 51% cutting back spending on incidentals and luxuries.
TAL Group CEO Jim Minto said: “The results show people have been examining their financial products and services to ensure their current needs are being met as well as reducing their debt levels. Financial security concerns are actually resulting in people being more engaged with their financials needs, which is a habit we hope will stick.”
The TAL-sponsored MoneySmart Week survey found that 29% of people have shopped around for better and less expensive financial products, 28% have completely paid off their credit cards and 21% have paid down some of their mortgage. Women seem to be more affected than men, cutting back much more on spending across most categories and just “making do”.
“People are looking to secure their financial wellbeing. Saving and cutting back on spending are natural in times of uncertainty, but most Australians do not have adequate financial protection in case they couldn’t work again and their income stopped,” Mr Minto said.
“Life insurance is one of the least understood financial products yet it is also one of the most important. MoneySmart Week is about equipping Australians with the knowledge to make better decisions about building and protecting their financial wellbeing. There is a long way to go in educating people about being money smart because Australia has a staggering $10.6 trillion underinsurance gap.
The TAL research also examined financial concerns over the next 12 months and found that 50% were concerned about the rising cost of living, almost four in ten Australians (39%) were concerned about their ability to increase their savings or secure their future, and 36% were worried about their ability to pay their everyday household bills. The latter figure rises to 55% amongst low income households earning under $40k per year. And women report a higher level of concern across key categories.
“This does make for worrying news but the fact that so many people have taken stock of their financial situation over the last two years will no doubt mean they are better prepared to face the next 12 months,” Mr Minto said. “That women report higher levels of cut-backs and concerns than men probably indicates the key role they play in family units.”
Other key findings from the research:
Economic confidence
- Higher income households are more optimistic about their household finances based on their knowledge of the economy (36% compared to 25% overall).
- Lower income households and South Australians are less likely to be optimistic (20% and 14% respectively).
Steps taken to take control of finances
- Baby boomers are most likely to have paid off their credit card debt (35%) versus 22% of Gen Y.
- Gen X is most likely to have reviewed their financial products and looked for less expensive products (33%).
Top concerns for the next 12 months
- Gen Y is most likely to be concerned with saving for a holiday (33%) – compared to 21% of baby boomers.
- 31% of full time workers say they are concerned about keeping their job.
Mr Minto concluded: “Financial literacy initiatives like MoneySmart Week are essential for helping people to understand that education empowers people to take greater control of their money and this is the key to financial freedom. Life insurance products like income protection, for example, are possibly one of the least understand products but one of the most beneficial for protecting people’s financial wellbeing.”
Table 1: STEPS TAKEN OVER THE LAST TWO YEARS TO TAKE CONTROL (BY GENDER)
| General population | Men | Women | |
| Paid off credit cards completely |
28% |
29% |
27% |
| Reduced debt on cards significantly |
17% |
18% |
15% |
| Paid down some of the mortgage |
21% |
22% |
20% |
| Reduced spending on food and groceries |
32% |
25% |
38% |
| Looked for cheaper and better financial products |
29% |
28% |
31% |
| Reduced spending levels on incidentals and luxuries |
51% |
45% |
56% |
| Set a firm budget for groceries |
21% |
18% |
24% |
| Making do rather than buying new |
50% |
43% |
57% |
Table 2: TOP CONCERNS FOR THE NEXT 12 MONTHS (BY GENDER)
|
General population |
Men | Women | |
| Keeping your job |
22% |
25% |
20% |
| Paying the mortgage / rent |
24% |
21% |
27% |
| Paying everyday household bills |
36% |
31% |
41% |
| Saving for a home or home improvements |
20% |
18% |
22% |
| Saving for a holiday |
26% |
26% |
26% |
| The rising cost of living |
50% |
46% |
54% |
| Increasing savings / securing your future |
39% |
11% |
8% |
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This survey was undertaken online by Galaxy Research with 1,260 Australians, from the ages of 18–69 years old. Age, gender and region quotas were applied to the same and the dataset was weighted to national proportions.
