Greg McAweeney

Results from the 2014 RaboDirect Financial Health Barometer (FHB) have uncovered a national picture about levels and attitudes to debt amongst Australians. According to the research, 23% of people claim to be more in debt than 12 months ago.

Key points

Greg McAweeney, Group Executive RaboDirect, says the beginning of a New Year is the perfect time for Aussies to take stock and get their financial house in order.

He warns that our attitudes to debt may have seen too many of us starting 2015 in the red, especially after the festive season when personal budgets might have spiralled out of control.

“While debt is a fact of life for most people, the way it is managed can mean the difference of being in financial control or being out of control. There are simple tips for ensuring you get on top of your debt and stay out of the red,” says Mr McAweeney.

To stay in the black, he provides the following top five tips:

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Greg McAweeney

Well-meaning parents may actually be doing their Gen Y kids more harm than good by letting them live at home unconditionally and indefinitely according to the latest research from the 2014 RaboDirect Financial Health Barometer (FHB).

According to a recent report, parents of Gen Y ‘never leavers’ pay an estimated $5,000 a year in added household costs to support their adult children living at home. And the FHB research shows that many of these Gen Ys are not mindful of their mum and dad’s household budget. Only 38% of Gen Ys living at home take steps to reduce utility bills such as turning off lights, minimising unnecessary heating or switching off appliances not in use, compared to 67% of Gen Ys who have flown the nest and are paying their own bills.

According to RaboDirect’s Group Executive, Greg McAweeney, the results of the latest FHB lead to inevitable questions about the role of parents in teaching their adult kids financial responsibility.

“It’s easy to understand why parents want to help their kids out, particularly if they feel they can within their means. You only need to look at the rising cost of living to see most kids would be happy with a little bit of extra help. Some may argue these adult kids who live at home are getting an easy ride – that isn’t a problem in itself but if they are missing out on learning valuable lessons about budgeting and financial responsibility it may turn into one,” Mr McAweeney said.

“I’m not suggesting parents kick their kids out, but it’s worth considering the ground rules and setting some financial goals for adult kids so they can develop sound financial habits for the future.”

The FHB also found that the longer Gen Y’s stay at home the less likely they are to want to leave – with more than one third (34%) of those aged 26 to 29 years claiming they loved living at home and never wanted to move out. For 18 to 21 year olds the thought of independence and freedom was somewhat more alluring with only 13% planning to stay at home as long as possible.

Mr McAweeney expanded, “Our research suggests that the older Gen Ys have a good understanding of the cost of leaving home and perhaps have established their independence. So the upside to living at home is clear for this group. I expect that among many 18 to 21 year olds there is an element of naivety about the cost of living and the aspiration to leave home is compounded by a desire to prove they can survive in the outside world.”

Other key findings from the 2014 Financial Health Barometer

Gen Ys who are not living at home are more likely to adopt some sensible money saving tactics as such using their own bank ATMS (67% versus 50% of those living with parents) and taking a packed lunch to work or study in order to save money (78% versus 63%)

‘Never leavers’ more likely to make more impulse purchases and spend more money doing so

The FHB also showed Gen Ys who are living with parents made an average of 4.2 impulsive purchases over the week prior to the research being conducted, and spent an average of $343 on these purchases. For those living out of home, 2.8 purchases were made, costing a total of $253.

Despite there being some discrepancy in attitudes to how long Gen Ys want to stay to home and how long they are welcome to stay, there is broad agreement in the triggers for eventually moving out. Although progress towards financial independence may be hampered by parents, almost half of adult kids and parents said they, or their kids, would move out when they felt they were earning enough to be financially independent.

A similar number of adult kids and their parents said that they, or their Gen Y kids, would move out when they had saved enough for a home deposit. Almost one in ten Gen Ys (8%) suggested they would stay at home until they moved in with a partner. The corresponding figure for parents was 11%.

Mr McAweeney concluded, “Although many Gen Ys are in no rush to leave, the reality is that the time will come with life’s triggers. And while parents may miss the company of their Gen Y kids, they can look forward to an extra $5,000 to spend every year which would go nicely towards an overseas holiday, a technology upgrade, or to give an added boost to their retirement savings!”

The post Parents warned: Boomerang kids replaced by ‘never leavers’ appeared first on AdviserVoice.

Greg McAweeney

The latest RaboDirect Financial Health Barometer (FHB) reveals that women are worse off than their male counterparts when it comes to the size of their savings buffer.

The survey revealed that females would only have a 92 day savings buffer if they were to lose their job tomorrow, compared to men who reported a 120 days savings buffer.

Overall the survey, which reflects the views and behaviours of 2,300 Australians aged 18-65, revealed that on average, Australians have a savings buffer that would only cover them for 3.6 months if they were to lose their job tomorrow, down from 4.7 months last year.

The findings come amid Australia’s rising levels of unemployment which are predicted to continue for the next two years.

According to RaboDirect’s Group Executive, Greg McAweeney, Australians can’t afford to be complacent about their savings: “Our research shows that on average, Aussies have a savings buffer that would last approximately three months. But against that, women are far worse off with just 13 weeks on average. That might not sound scary but the truth of the matter is it’s just not enough, especially when you consider all your expenses and the rising cost of living.

“We never think the worst will happen, but that doesn’t mean we shouldn’t be protecting ourselves against crippling unforeseen circumstances like losing your job. Having a healthy savings buffer isn’t just about having a little extra put aside for indulgences like holidays. It’s also about having protection to continue to fund your mortgage, childcare fees and the like until you get back on your feet. A good rule of thumb is to try and have a buffer of five to six months in a rainy day savings account.”

While it might seem difficult, Mr McAweeney says that increasing the savings buffer isn’t impossible. It requires simple planning and creating regular savings habits: “Pay yourself first when your salary hits your transaction account by direct debiting a regular amount to your savings account before you’re tempted to spend it. Do a stock take of what you’re spending your money on every month. This always surprises people and helps you to identify where you’re wasting money. If you’re funding your lifestyle through expensive credit card debit you’ll never be able to get a savings plan going. And make sure you’re using a savings account with a good ongoing rate and don’t leave your money lying idle in a transaction account that makes your bank rich, not you,” concluded Mr McAweeney.

Key findings:

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