The most recent NSDB, which RaboDirect conducts annually, polled over 2,355 financial decision makers aged between 18 and 65, with a focus on Australians’ attitudes towards debt and savings. The survey results are weighted by gender, age and location to be representative of the broader Australian community, in line with statistics published by the Australian Bureau of Statistics.
 
According to Renee Amor from RaboDirect, over 69% of women follow a budget, compared to only 60% of men.  And this theme is reiterated when it comes to planning for the future, as 92% of women, compared with only 85% of men, believe they should be saving for retirement.
 
Ms Amor said that in the face of recent publicity highlighting the fact that so many Australians are seriously underfunded for retirement, both sexes should be looking at concrete ways to improve their financial outlook and making the most of their hard earned cash.
 
She then went on to list some simple steps to increase savings and decrease debt.
 
“It will be no surprise that effective budgeting comes in at step number one. A budget needn’t be complex, but knowing exactly how much you spend and what you spend it on is the first step to taking control of your finances and putting something aside in savings. 
 
“If you feel that you are not able to tackle your finances alone, seek advice from a professional financial planner,” she said.
 
Ms Amor said that the next step was to pay off your most expensive debt, such as your credit card, and not to be afraid to look for a better deal from your bank. 
 
“The NSDB found that men were more likely to switch banks, with 69% describing themselves as switchers, compared with only 63% of women, who were more likely to stick with the one bank.
 
“Nonetheless, it really does pay to take advantage of the best possible rates on offer for your savings, and that means using a true high interest bearing account versus an everyday transaction account, which typically pays little if any interest and charges fees for the privilege.”
 
Ms Amor also said that many Australians might be surprised to hear that collectively they are missing out on around $3.5 billion in lost interest every year by keeping their money in no- or low-interest bearing accounts.
 
While high interest bearing accounts cannot take the place of everyday transaction accounts, they can help savings grow faster.  Term deposits can also be a good option, as they provide a guaranteed return as well as higher interest rates. 
 
“In the better term deposits, there is the option of taking interest monthly, quarterly or half yearly, so locking funds away on a secure term still allows access to the interest,” she said.
 
Ms Amor finished by saying that even though 42% of women compared with 35% of men reported that dealing with money was stressful, following these few simple steps could reduce anxiety.
 
“Many Australians are already trying to do the right thing by saving. I would just like to encourage them to put their hard earned cash into true high interest bearing account or term deposits.  It’s a positive step that can make a real difference.”

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And that is, that far too many of us are spending more time planning our next celebratory meal than planning for our financial futures.
 
The Huffington Post recently published the results of a survey of 11,000 Americans who were asked about their levels of savings and debt, and the results made sobering reading.  Nearly half of all Americans have no safety net at all, and of those that do, 41% have less than $500 to fall back on.

According to Renee Amor from RaboDirect, these figures may sound surprising, but when it comes to Australians, the situation isn’t much different. 
 
“The recent RaboDirect National Savings and Debt Barometer (NSDB) revealed that 46% of working Australians have less than one month’s savings, and 20% have no savings at all,” she said
 
What’s more, in the case of both Australians and Americans, planning for their financial futures appeared to take a backseat to other concerns.
 
Of the Americans surveyed, 54% said they had not set up an emergency cash savings strategy and that as a result felt they would be stuck in their current situation for the foreseeable future.
 
Ms Amor said the NSDB had found 66% of Australians admitted they had no long-term financial plan, with 23% saying that they felt that nothing they could do would make a big difference to their financial situation.
 
“What a lot of people don’t realise is that not only are regular savers preparing for unexpected events as well as a more comfortable retirement, they also tend to be happier with their life and in better health that those that don’t save,” she said.
 
“It is always better to use savings rather than debt for emergencies if you possibly can,” Ms Amor explained, “but even if you have no savings now, it is never too late to turn the situation around and start securing your future financial well-being with a regular savings plan.
 
“Be sure to put your savings into a true high interest savings account.  Keeping your excess cash in a transaction account can mean missing out on interest which helps you build your savings more quickly.”
 
The RaboDirect NSDB revealed that Australians are missing out on around $3.5 million in lost interest every year by keeping their money in no- or low-interest accounts.
 
Ms Amor concluded by saying that with the NSDB showing a clear correlation between regular saving and health and happiness, she would encourage all Australians to start a regular savings plan, no matter how much they earned.
 
“You work hard to earn your money, make sure your money is working just as hard in a high interest saving account,” she said.

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“Most people would agree that the whole period leading up to Christmas is pretty scary for the budget. And it isn’t just the gifts, it’s also the additional costs associated with a busy social schedule that can really add up,” said Renee Amor, RaboDirect spokesperson.
 
“Needless to say, the best strategy is to have savings, and to purchase gifts throughout the year, but the reality is that for most people this hasn’t happened.  And by the beginning of November, with Christmas just seven weeks away, the sense of financial fear starts to grow.
 
“Don’t lose heart though. There are a number of things you can do to make sure you emerge from the Christmas season without debts you’ll be paying off until Christmas next year.”
 
Ms Amor went on to say that consumers should leave going into the red to Santa, and outlined five tips for staying in the black:

1. Between now and Christmas, put aside the absolute maximum you can afford per week to pay for gifts. Even $50 per week is almost $400 that won’t have to go on the credit card.
2. Think about your Christmas list and ask yourself whether you need to buy for absolutely everyone on it. Remember: one in five Australians typically receive a gift they don’t want.
3. It’s the thought that counts. Most people are touched by a homemade or baked gift…and cooking at home won’t break the budget.
4. Leave yourself enough time to buy gifts.  Some of the most expensive purchases are made because time is short and a spending frenzy occurs.  If you leave yourself enough time to think and choose carefully, you can make more sensible choices.
5. When you go out to celebrate, set yourself a budget.  It is very easy to spend surprisingly large amounts without realising it. Try taking cash only, that way you are limited to spending only what you have.

Looking forward, Ms Amor said, if you do get to January with a sinking heart and maxed out credit cards, the best form of defence is a good offence. 
 
“Start preparing now for next year. The first thing you will want to do is pay off any credit card debt.  It is likely the most expensive debt you have and should take priority. Your bank can help you work out a payment plan if you are really struggling,” Ms Amor said. 

“The best way to avoid history repeating itself at the end of 2013 is to start a regular savings plan at the beginning of the year.  Bear in mind that if you use your everyday transaction account for this purpose, or even a separate ‘savings’ account with one of the major banks, you are probably earning little or no interest on your money.”
 
The recent RaboDirect National Savings and Debt Barometer found that Australians are missing out on almost $3.5 billion in lost interest every year by keeping their money in low interest bearing, rather than true high interest saving, accounts. RaboDirect is calling on consumers to take control of the situation, encouraging them to check what interest rate they are currently getting and to see if they can find a better deal.
 
“We have been very vocal about the fact that the major banks have been giving consumers the raw end of the deal with their low-interest bearing accounts. But it is up to consumers to take heed and to do something about it. And there is no time like the present,” Ms Amor said.
 
Ms Amor concluded by saying that with the new year not far away, it is a timely reminder to take a step back, to put some plans in place, and to work towards improving your financial outlook.
 
“A bit of prior planning and saving, and Christmas 2013 will look a lot better come November next year!”

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RaboDirect also took the top spot in the Term Deposit (long term) category.

These latest awards, which are part of the Financial Review Smart Investor Blue Ribbon Awards for 2012, were announced in the magazine today.  The Blue Ribbon Awards are given to Australia’s highest quality, lowest cost products, as chosen by Smart Investor and research houses Morningstar, Infochoice, Lonsec and Rice Warner Actuaries.

Spokesperson for RaboDirect, Renee Amor said, “RaboDirect’s goal has always been to help consumers make the most of their savings so it is particularly gratifying to be awarded the Savings Institute of the Year. And it’s just as rewarding being recognized for the strength of our long term deposits offering because we pride ourselves on building long term relationships with our customers.

“We have been enjoying a successful year in terms of growth and having award winning products no doubt helps with this. In June this year APRA reported that RaboDirect had the biggest deposit balance inflows, growing by 60 per cent over 12 months and by three per cent just in the month of April.”

The Blue Ribbon honours come off the back of the third instalment of RaboDirect’s highly successful “Steal back your dreams” campaign which urges people to move their money from low interest bearing transaction accounts to high interest savings accounts. The campaign has been shortlisted for a Golden Effie award this year after taking home the gong in 2011.

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This group is also most likely to believe they don’t have control of their financial well-being with 50% claiming that nothing they do will make a difference.

The RaboDirect 2012 National Savings and Debt Barometer highlights that those without a long term financial plan are the most uncomfortable with their finances. It also found that of those with a long term plan, 75% said they were very comfortable with their finances.

In light of these findings, RaboDirect is calling on Australians to pull their heads out of the sand and take control of their finances. 

Speaking out at the start of Financial Planning week, spokesperson Renee Amor said:

“While we all have the opportunity to improve our financial wellbeing, our survey results clearly show that a number of us need more assistance when it comes to handling our finances. The most important step is to confront your finances head on and commit to making a positive change.

“Once you have done this, you can then take some simple steps to start improving your financial outlook. Put together a budget; ensure your money goes into a true savings account with high interest that doesn’t charge fees; set-up a regular savings plan; and speak to a professional if need be about how else you can make the most of your hard earned cash. 

“Financial Planning week is a great reminder for you look at your finances and see if there are ways you can improve your wealth. We realise that for some people dealing with your finances can be daunting and that is where calling on a professional really can help.

“For those who have been apprehensive about using a financial planner to date, this week they have the opportunity to test one out in a safe environment and with no commitment.  

“At RaboDirect we strongly believe in empowering customers through straight-talking information about products and strategies that can help them make better decisions. For that reason, we congratulate the FPA for setting up a consumer website that also provides Australians with a clearer understanding of finances in everyday language.”

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RaboDirect’s 2012 National Savings and Debt Barometer reveals that Baby Boomers are feeling the pinch and are the most pessimistic of all the generations about the economic outlook of the nation. It shows that almost half (40 per cent) of Baby Boomers who expect to retire with a mortgage are planning to sell their property in order to pay it off.

At the same time, nearly a third of Boomers (30 per cent) intend to use their superannuation to pay off their mortgage – a plan that RaboDirect says is risky, particularly as a number of pre-retirees have recently seen the value of their super portfolios suffer.
 
Renee Amor, RaboDirect Australia spokesperson said:
“The RaboDirect National Savings and Debt survey findings about Boomers are not all bad. However, it has highlighted that because we are living longer than previous generations, we need larger nest eggs to maintain our living standards. Everything that can be done to bolster savings and secure a reasonable retirement income is a step in the right direction.
 
“For Boomers who are nervous that they will be facing tough times, there is a way to get the course of their savings plan back on track. It may sound basic, having a formal budget is one quick and easy way to start being in control of your finances.

“Another is to take a look at your investment and savings products and make sure you have the most suitable ones for your situation. A true savings account, for example, should have an ongoing and decent interest rate. Leaving your hard earned cash in low interest accounts is tantamount to throwing money away.
 
One of the best ways to help eradicate debt and ensure that you are making the most of your money is to consult a professional. And the sooner you start, the better.” 
 
Key points:

• 30 per cent of Boomers expect to retire with a mortgage
• Just over 40 per cent of those expecting to retire with a mortgage, plan to sell their property pay off the mortgage and buy a cheaper property
• Meanwhile, some Boomers also plan to pay off their mortgage with their superannuation (just under 30%)
• Boomers are feeling the pinch and the pressure and are the generation most likely to say that they are feeling worse off and are most pessimistic of all the generations about where the economy is heading
• 39% expect to be worse off in 12 months
• 47% believe they have less money to live on each week
• 62% expect economy to be worse in 12 months
• Baby Boomers expect to retire with $400,000 in superannuation – which is half the amount they think they need. They currently have $200,000 in funds
• Even if Baby Boomers doubled their super balance between now and retirement, they acknowledge that it will only give them around 50% of what they need

There are some positives however to come out of the 2012 National Savings and Debt Barometer for Baby Boomers:

• Baby Boomers feel more in control of debt and are less stressed about money management
• Almost 70 per cent of those Boomers who say they have less money to live on admitted to bargain hunting as a result
• Boomers are more likely to download a weather app than a banking app – if Boomers payed as much attention to the stormy or otherwise state of their finances, and downloaded tools to help them save more, spend less, budget better etc. they could find they improve their financial situation.

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A recent national survey conducted by RaboDirect revealed just how real the need is for financial literacy to be taught in schools, with Gen X and Baby Boomers outed as the generations currently struggling most with debt issues. The question then stands – would the outlook for these generations have been different if they were taught practical ways to deal with their finances from a young age?

Key points:

• 80% of Australians believe that financial literacy should be taught in schools (according to the 2012 RaboDirect National Savings and Debt Barometer)
• RaboDirect supports the work of the government in regards to teaching financial literacy in schools and calls on others to get behind the work of Moneysmart
• RaboDirect highlights the need for parents to be involved in the process of teaching kids how to deal with money and finances – parents are some of the most influential ‘teachers’ in children’s lives 
• RaboDirect also highlights the need for all Australian’s to take stock of their financial situation, and take positive steps to improve their outlook. Prepare a budget, set savings goals and start saving today.

Renee Amor, spokesperson for RaboDirect said:

“We are pleased to see today that parliamentary secretary, Bernie Ripoll, has released the details of the Moneysmart teaching aid for schools. Our research clearly supports the need for more to be done to teach Aussies how to deal with savings and debt with less than half of the population saying they are comfortable with their finances. However this kind of learning shouldn’t just be confined to the classroom – parents are some of the most influential teachers kids will ever have, so talking openly about money and teaching practical savings tips at home is also key to ensuring our future generations are financially savvy.”

“If financial literacy had been part of the curriculum when Gen X and Baby Boomers were going through school, we might find that they would have a very different financial outlook today. As it stands, our research shows that a number of Boomers are carrying debt into retirement but less than a third of this generation are actually saving for retirement. The message is simple – all Australians can take action to improve their financial well-being and you are never too young to start.”

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According to the latest RaboDirect National Savings and Debt Barometer, Baby Boomers expect to retire with $400,000 in superannuation – which is half of what they think they will need to fund a financially secure retirement.

The opportunity for Boomers to take action is apparent, with less than a third of Boomers saying they are saving for retirement. Almost 23% of Baby Boomers think that, other than themselves, the government is responsible for ensuring they have a financially comfortable retirement.

With super funds reporting very modest returns for End of Financial Year up at just 0.5%, RaboDirect is calling for more to be done to address the issue of financial well-being for Boomers during retirement.

Renee Amor, spokesperson for RaboDirect said “Australia’s ageing population is showing worrying signs about being significantly underprepared for retirement. Our most recent Barometer shows that even if Baby Boomers doubled their superannuation balance between now and retirement, they would still only have approximately half of what they need. There also seems to be a huge disparity between the returns being made in these markets and what boomers with super believe will happen in terms of retirement funding return.

“The issue of Boomer Australians carrying debt into retirement is a matter for individual action based on a person’s circumstances. But the trend should also prompt our policy makers with a clear imperative to do more to encourage greater saving both inside and outside of super. Australians heading into retirement saddled with debt sends a very clear signal that more can be done.

She went on to say there are specific steps Boomers can take to improve their financial situations.

“With less than a third of Baby Boomers actually saving for retirement, RaboDirect is calling on all Australians to act now for their financial well-being during retirement by taking some simple steps today. Put a savings plan together; ensure your hard-earned cash goes into true-to-label high interest savings accounts that don’t charge fees; and start to engage with your superfund and if it isn’t performing for you, speak to a professional about which funds and investments best suit your life stage and financial needs.”

Key Findings:

• Baby Boomers expect to retire with $400,000 in superannuation – which is half the amount they think they need. They currently have $200, 000 in funds
• Despite share market turmoil and their proximity to retirement, on average Baby Boomers still expect their super balance to double between now and their retirement
• Even if Baby Boomers doubled their super balance between now and retirement, they acknowledge that it will only give them around 50% of what they need
• As a consequence, 57% of Boomers believe they will run out of money during retirement (compared to 48% Gen X and 31% Gen Y)
• Only 32% Boomers are saving for retirement (29% of Baby Boomers say they are saving for a holiday)
• 22.7% Baby Boomers think the government has the primary responsibility, outside of themselves, for ensuring they have a financially comfortable retirement.

19 July 2012

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The findings suggest that more Gen Ys are feeling more independent from their parents – possibly helped along by a softer housing market. However, for many Baby Boomers, it’s a very different story, with some unable to give their children financial help even if they want to. Key findings in this regard include:

• Almost 53 per cent said they would like to help their kids, however just under 20 per cent expect to be able to.
• Some 30 per cent expect to retire still encumbered with a mortgage.
• Forty-one per cent of those retiring with a mortgage expect to repay it only by selling their property.

According to Renee Amor, spokesperson for RaboDirect, the softer housing market also sounds a warning for Boomers relying on the property market to fund their retirement.

“It has been traditional in this country to expect to retire with the family home paid off and increasing in value. It’s been seen as the ultimate safety net and often used to help younger family members get their start in the property market as well as funding retirement lifestyles,” she said.

“Our survey findings directly contradict this expectation and are of real concern in an environment where housing values are slipping and our population is ageing.”

 Ms Amor said, however, that it’s never too late to counter these trends.

 “Act now, regardless of your age. Even small steps and changes in budgeting, savings and spending behaviour can help build a bigger nest egg to maintain your lifestyle in retirement. One way to make an immediate positive difference is to use a genuine high interest savings account and Term Deposits. That way you can ensure that any funds you do have to hand are working for you 24/7, rather than wasting away in low- or no-interest transaction-style accounts which are often – misleadingly in our view – labelled as ‘savings accounts’,” Ms Amor said.

3 July 2012

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