Financial stress on the rise as more households spend more than they earnFinancial
stress is increasing in New South Wales and the number of households which are
spending more than they earn has escalated during the past five years, according
to a new Wesley Mission report launched in Sydney yesterday.
The
Wesley Report Facing financial
stress reveals that an alarming 44
per cent of NSW households are suffering financial stress – up from 37 per cent
in 2010.
The
survey also found that 38 per cent of NSW households are spending more than they
earn - a seven per cent increase from 2010.
Wesley
Mission commissioned Urbis to survey 500 NSW households in late 2014 and to
compare the results with those found in 2010.
“It
is a telling reality that translated state-wide almost four in ten or 1,022,010
households are now technically insolvent,” said the CEO of Wesley Mission the
Rev Dr Keith Garner who launched the Report with the Deputy Chair of ASIC Mr
Peter Kell.
Between
2010 and 2015 disposable income has decreased and an increasing number of
households are spending more than they earn.
“When
there are no savings to fall back on when an illness or misadventure hits,
hardship usually follows,” Dr Garner said.
The
ability to manage spending has also declined over time with fewer households
able to keep a budget, growing from five to 19 per cent since
2010.
“We
hear politicians of all persuasions drawing the analogy between government
spending and household spending – the need to balance the household budget,” Dr
Garner said. “It is clear from these figures that households are not balancing
their budgets and that the burden of debt is increasingly shifting from the
public to the private sphere.
“Households
are simply not living within their means and are unable to save
money.”
According
to the Wesley Report the increase in financial stress during the past five years
is not surprising given that there have been large price increases in
household-related expenses. According to the Consumer Price Index (CPI), between
2008 and 2013 consumer electricity prices rose by 83 per cent, followed by water
and gas prices with an increase of 63 per cent and 57 per cent
respectively.
In
addition, between 2006 and 2011, Australian consumers were spending at least 30
per cent more on health insurance, medical and health expenses, utilities,
mortgage repayments and education.
The
evidence from this Wesley Report suggests that it is not one specific aspect of
financial stress that is driving the total increase in 2014; rather it is a more
subtle general increase across all aspects that is having an
impact.
As
in 2010, in 2014 the most common selected indicators of financial stress
were:
· 16 per cent of all
households had to seek help from family and friends in 2014
· 16 per cent of all
households were not able to pay electricity/gas/telephone bills on
time
· 12 per cent were not
able not to pay for car service/repairs
· 12 per cent or one in
eight households were not able to pay for medical care; and
· 12 per cent had to pawn
or sell something
Financially
stressed households were more likely to have characteristics
like:
· an income of $52,000
per year or less
· the main source of
income being government benefits
· a decline in annual
income over the past 12 months
· spending more than they
earn
· a rolling credit card
debt and an inability to pay this off on a yearly basis.
“Financial
hardship and financial anxiety is impacting upon the health, safety and
wellbeing of individuals and their families,” Dr Garner said. “This places a
much bigger strain on medical and community services and demands a much bigger
investment in addressing the management of financial stress through more
counselling and education.
“We
are also aware that financial difficulty generates a range of other issues.
People who are struggling with financial stress often have other hardships such
as anxiety, homelessness, addiction, or domestic violence. These difficulties
can push some people beyond the point where they feel they can
cope.”
In
this latest Wesley Report more than one in five respondents indicated that
financial stress had resulted in physical illness, relationship issues and
mental health issues.
The
findings from the study also reinforce the link between substance abuse and
financial stress, with 15 per cent of respondents indicating that they have
drunk alcohol excessively as a result of financial stress, five per cent taking
non-prescribed prescription drugs and three per cent taking illegal
drugs.
While
63 per cent of non-financially stressed households believe they can meet future
expenses, only 12 per cent of financially stressed households believe they can.
Nearly half of financially stressed households (49 per cent) indicated that it
would simply be impossible to meet a $2,000 payment; this compares to only six
per cent of those in households not classified as being financially
stressed.
Wesley
Mission believes that there is a need for a review of the requirements for
financial advice, and for the creation of a simple level of personal financial
advice to be available without the in-depth assessments and costs that are
prohibitive to people in financial stress who are seeking advice. We need to
free up the system for the most vulnerable.
The
promotion and awareness of advice and education opportunities needs to be
increased across the sector so that in the midst of tension, anxiety and
uncertainty, people experiencing financial stress can find an appropriate,
practical and relevant pathway to advice and planning.
Wesley
Mission promotes greater industry awareness of the issue of financial stress in
both the community service provision and financial industry sectors. A broader
provision of financial literacy and counselling programs across these sectors
would also increase the awareness and availability of education and lower cost
options to advice for those in financial stress.
It
is important to have a broader approach to identifying and directing those
experiencing financial stress to advice and education so that they can improve
their financial literacy.
Not
only should this broader approach be promoted in services engaging those
experiencing financial stress, financial lenders and services should also
provide information as to where individuals can find relevant financial
counselling.
“Lenders
need to seriously consider the efficacy of this approach: the introduction of
simple independent financial education programs promoted through lenders would
provide borrowers with a basic understanding of their capability to service
different avenues of credit,” Dr Garner said. “This would also benefit the
lender as it would lower the risk of borrowers defaulting.”
Wesley
Mission is also calling for greater awareness of the experience of women in
financial stress, especially among the services and financial counsellors that
they engage with, to ensure that their needs are not going unseen and that their
vulnerabilities are not made worse.
“For
decades we have had health and fitness campaigns and it is now time for us to
recognise that financial health is also important for physical and mental
wellbeing,” Dr Garner said
“The
evidence in this Wesley Report only underlines the fact that such concerted
action is needed more than ever. The costs to individuals, the community and
governments are far too great.”
Ends/
Photo:
Launching the latest Wesley Mission report on financial stress: CEO of Wesley
Mission the Rev Dr Keith Garner and Deputy Chair of ASIC Mr Peter
Kell
Wesley
Mission provides financial counselling to more than 1000 people each year across
Sydney, Newcastle and Wollongong.
Urbis
was commissioned by Wesley Mission to conduct the survey of 500 NSW households
in late 2014.
<저작권자 ⓒ christianreview 무단전재 및 재배포 금지>
|
|