Heather McGovern
Research out yesterday from MyState Bank has found that three-quarters of Australians (74%) are comfortable with the level of government debt reaching $1 trillion by June 2025 ($37,000 for every Australian), regarding it as necessary to support the economy and Australian livelihoods during the COVID pandemic.
However, when it comes to the individual during the pandemic, a higher level of personal debt is concerning to 62% of Australians, despite interest rates being at historical lows.
The research, undertaken following the Federal Budget, provides insights into the views of Australians and their level of comfort with ballooning government debt, personal debt and the key issues they see coming from the Budget.
When asked which initiatives were the most important during this current period, the creation of jobs was the overwhelmingly most important initiative for the government according to 68% of Australians. This was followed aged care (47%), support for low-and-middle-income earners (45%) and supporting mental health (40%).
The research also found that two-thirds (63%) of Australian are concerned when it comes to ongoing snap state boarder closures due to COVID outbreaks because of its impact on the health of the economy and mental health of Australians.
“Australians are very much focused on their back pocket and looking for the financial silver lining,” said Heather McGovern, MyState Bank General Manager of Customer Experience.
“What started out as a health crisis has been felt in the hip pockets of many Australians across the country, and while lockdown measures have helped some Australians into a better financial position; for others, it has left gaping holes in their household income.”
“This can be seen in the way people ranked the importance of Budget measures – unsurprisingly, job creation is the most important for people, and support for those low-and-middle-income earners, will have the biggest impact in people’s back pockets.”
“Now is the time to focus on putting yourself in the strongest financial position you can be in, whether it be paying off debts, boosting your savings account, or tucking money away if an emergency strikes,” added Ms McGovern.
Here are MyState Bank’s six tips on how to make the most of the Federal Budget and maximise your financial situation:
- Keep a water-tight budget. Track your spending each month and determine the things that you are able to cut back on to limit spending. A good way to assess your finances is by using the 50-30-20 rule; 50% of your salary goes to things you need i.e. rent or mortgage, household bills, car payments etc, 30% on wants i.e. clothing, sports, hobbies, weekend plans etc, 20% to be stashed away in savings or investments.
- Pay down small debts. If you are in a position to do so, pay down small debts, like credit card balances or Buy Now Pay Later debts. Being able to chip away at larger totals will help with any interest being accrued on these balances.
- Pay yourself. It’s all too easy to forget to add to your own emergency fund when you’re focusing on paying for other things. But once the debts are paid down the next most important thing is to focus on building a solid savings nest egg. This way, if you are faced with any unnecessary expenses, it won’t come as a shock to your credit card.
- Let your bank app do the heavy lifting. Make use of any technology your bank offers to help with budgeting and finances. If your bank offers automated budgeting in its app, take a look at your budget categories and consider where you might be overspending. This will be a good indicator if you’re unsure of where to cut back on spending; you might be spending more on food delivery than you realise!
- Find a good savings account. Although it might seem counterintuitive, for those with savings already, find a good savings account that has a good interest percentage on it. It might not seem it now, but putting your money to good use in a higher interest savings account may be beneficial further down the track if you don’t need to access your money.
- Automate it. Some of the hard work towards achieving your money resolutions can be taken out by automating wherever possible. For instance, setting up a high-interest savings account and getting paid directly into this account. The Autosavings capability in the MyState Bank app is another example, helping you recognise how much you can safely afford to save and moving the funds for you – without you having to lift a finger.