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RaboDirect, the online savings and investments bank of Rabobank, today released key findings of its comprehensive National Savings and Debt Barometer, a survey of more than 2000 Australians across all states and territories. The survey shows that a significant number of Australians are already carrying high levels of debt without a feasible plan to pay it off even within their lifetimes.
Greg McAweeney, RaboDirect General Manager said: “At a time when an increasing number are also reporting mortgage stress the last thing we need to add to that picture is more debt. Our survey reveals a picture of Australians who are working hard - but still not addressing the looming impact of ballooning personal credit card debt, insufficient savings and inefficient budgeting. In fact alarmingly, 80 per cent of the population don’t have a formal budget.”
The report, conducted by custom research agency TNS, also reveals that the attitudes of Australians to their household finances are full of contradictions, swinging between over confidence and extreme nervousness.
“As we head into the traditional Christmas spending season, RaboDirect is keen to give a clear heads up to Australian consumers: understand the full picture of your financial position; get back to basics such as setting a personal budget; and think twice before spending on the plastic, which we know can have exorbitant interest rates often in excess of 20 per cent,” said Mr McAweeney.
Key Facts – Debt
- A third of Australians feel they are ‘constantly in the red’
- 74 per cent believe paying off debt is the best way to save money
- One in five credit card holders worry about not paying off their bill in full each month; yet one in six are happy to make purchases knowing they cannot pay for it in the interest free period
- When it comes to impulse buying on credit cards, there is little difference between the genders, however men are more likely to buy on credit and not pay off the amount in the interest free period
- More women than men have cut back spending in the last year (63 per cent compared to 53 per cent)
- Gen X is most likely to always feel in the red (32 per cent) and least likely to budget (54 per cent)
- Baby Boomers are best at budgeting and least likely to feel in the red
- One in four Australians feel a lack of empowerment over their financial position, while only two in five have sought out and received financial advice
Key Facts – Savings
- 28% of Australians say their savings would only last two months should they lose their job, while just over one in 10 (13 per cent) have no savings at all
- Low interest transaction accounts are the most popular home for ‘savings’ with 46 per cent of regular savers putting money in their transaction account (representing 41 per cent of total savings in last six months). This is despite the fact that interest paid on these accounts is negligible and often eaten away by fees
- Gen Y are saving more regularly than older age groups and are most likely to have a high interest savings account (56 per cent)
- Two in five of us are saving less than a few years ago
- Only seven per cent believe employer-funded superannuation contributions will be enough to cover their retirement needs
- Although 54 per cent say they can pay for what’s needed without problems, another 35 per cent struggle to make ends meet. More than one third say they are worse off than last year and almost 60 per cent say they are cutting back on spending
Solutions - getting back to basics
The RaboDirect National Savings and Debt Barometer set out to understand the need for education and financial literacy in Australian society, and the many opportunities there are for people to address their personal finance problems before it’s too late.
“While some of the survey findings may be alarming, we believe that the real story here is that there are solutions to these problems,” said Mr McAweeney.
“And most of these are relatively simple. We’re looking at a back to basics approach to financial fundamentals - things like proper budgeting, targeted debt reduction or learning to avoid excessive debt in the first place, and having a regular savings plan,” he said.
“It seems that in some cases these steps are simply not being followed. For example, the vast majority of the population has no personal budget, while half or so of us think our low-interest ‘transaction’ accounts are ‘savings’ accounts,” he said.
Basic tips
- Set a budget (revisit regularly and adjust as necessary to match personal/financial needs)
- Spend less than you earn
- Seek tools and information, such as on the Australian Government’s ‘Understanding Money’ website
- Pay off your most expensive, non deductible debt, first
- Regularly check that your financial products (mortgage, transaction and savings account, insurance, credit facilities etc.) suit your needs and offer the best value
- Have your salary paid directly into a high interest savings account rather than leaving money idle in a low-interest bearing account
- Seek help early if things get out of hand
Mr McAweeney said that what it all comes down to is the need for greater financial literacy and education about basic financial planning - which more than 70 per cent of respondents agreed should be taught in schools.
About the National Savings and Debt Survey
The RaboDirect National Savings and Debt Survey is a large, nationally representative on-line survey. It was commissioned by RaboDirect and conducted by TNS, Australia’s largest custom research company. The survey was conducted in October 2010, among Australian financial decision makers aged 18-65 years. A total of 2,268 adults participated in the survey.
About RaboDirect
RaboDirect is the online savings and investment bank launched by Rabobank Australia Limited in 2007 and offers customers access to high interest savings, competitive term deposits and the ability to buy and sell funds online 24/7. Customers also benefit from consolidated administration, reporting and taxation; the type of administrative technology usually only available to financial advisers.
RaboDirect is a division of Rabobank Australia Limited, part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 110 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness.
Rabobank operates in 48 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1600 offices and branches. Rabobank is among the top 10 safest banks in the world for over 10 years, according to Global Finance.
About TNS
TNS Australia is a specialist research consultancy, delivering market information and insights customised by industry sector. The company is divided into sector-expert teams, combining global resources with local understanding of consumer, technology, finance and business, social and government, and travel and leisure industry sectors. With a product offering covering the entire range of marketing and business issues, including product development and innovation, brand and communication, stakeholder management, retail and shopper, and qualitative insights, TNS provides compelling and actionable insights. Delivering best-in-class service across more than 75 countries, TNS is part of Kantar, the world’s largest research, insight and consultancy network. Please visit www.tnsglobal.com/australia for more information.
