According to the recent Household Financial Wellbeing Index by banking giant ING, two out of every three households report that they don’t have enough funds to live comfortably between paydays.
One out of three of those households charges necessities on credit cards between paydays, while nearly half estimate that they would still need to take home another $300 per week to live comfortably. However, nearly four out of five respondents said that they would rather save a raise of 5% than spend it.
The ING Household Financial Wellbeing Index is released quarterly and ranks levels of wellbeing using six different indicators, including mortgage debt, credit card debt, household income, investments, savings and ability to pay their bills.
According to the index, only 9% report being satisfied with their present take-home pay. And among those who reported themselves as being cash strapped between paydays, 15% reported that they are chronically strapped for cash. 35% of those who feel they are often cash strapped reported using money from their savings to catch up on household expenses during shortfalls, while 31% reported using credit cards to get them through to the next payday. One out of ten report having borrowed from their family.
6% reported that their monthly income was not sufficient to pay all of their debt and immediate bills, while 7% saw it as “impossible” to pay every monthly bill promptly. 15% reported that they have no savings, while one out of four reported that they have no investments or assets. Homeowners came out ahead in the statistics, though, as 42% reported being ahead in their mortgages.
What This Means to You
At Approved Financial Planners, we feel the report shows interesting patterns. It is encouraging that so many respondents said they would save a raise rather than spend it. Thanks to the effects of the Global Financial Crisis (GFC), Australians have become savers and investors who are learning to sacrifice some of their present lifestyles to provide for their futures.
In our practice, we have found that that many of the people we talk to have more resources than they believe, but aren’t using them to their full potential. If you would like a complimentary financial consultation with no obligation, please call our Perth office today: (08) 6462 0888.