Are Aussies making ‘cents’ of their hard earned dollars?
RaboDirect finds increasing confidence is the key to financial happiness.
The bank balances of hard working Aussies may be on the decline, due to falling consumer confidence levels, according to a new white paper, RaboDirect Financial Health Barometer – A Five-Year Review.
The retrospective look at RaboDirect’s Financial Health Barometer, from 2011 – 2015, has revealed the more confident Aussies are about their finances, the more likely they are to say they are completely happy with life and actively grow their wealth. Findings show confidence levels peaked in 2013 but there’s been a decline in recent years.
The results show a correlation between consumer confidence and consumers’ level of savings. According to the research, average savings in a typical month in 2014 was $908, a figure that fell to $705 in the 2015 survey; a decline of nearly 29 per cent. At the same time, in 2014, 49 per cent of consumers agreed or strongly agreed that they were confident with their finances, a number that dropped to 45 per cent in 2015.
“The first Financial Health Barometer white paper has highlighted a growing need to reinvigorate Aussies' confidence in their finances,” said Glenn Wealands, Head of Research & Analytics at Rabobank Australia and New Zealand.
“There is a real opportunity for all Aussies to become more informed about their finances to help boost their bank balances. Financial control is within the grasp of most people and it’s about taking simple steps such as paying down debt first, and seeking out an account earning a higher rate of interest with no account keeping fees.”
What’s worrying, the research shows that the amount Aussies think they’ll have to retire on is below industry estimates and declining. In 2012 Aussies were expecting to retire with $470,485 and in 2015 this amount dropped to $398,707. The Association of Superannuation Funds of Australia estimates the lump sum needed to support a comfortable lifestyle for a couple is $640,000 (or $545,000 for a single person) assuming a partial age pension1
The results profile Baby Boomers as the least financially confident generation, while on a gender basis, women continue to have less than men in retirement savings and are not as confident when it comes to their overall finances.
On the flip side, Gen Ys are certainly not giving up on a financially fit future, the white paper revealed that this generation was increasingly likely to make contributions into their super, and more likely to have a long term financial plan in place.
Thirty-two per cent of Gen Ys made voluntary super contributions in 2015, up from 29 per cent in 2014; while 45 per cent of Gen Ys said they had a financial plan in 2014, which was the only generation to increase in 2015, to 48 per cent.
“Every hard-working Aussie wants to be able to retire with enough of a nest egg to live well, while they’re able to enjoy it. Our research shows that for many, making smarter choices, that will help build their savings buffer needs to be a top priority,” Wealands continued.
The recent string of scandals in the financial advice industry has also coloured Aussies’ confidence in the financial advisory process. In 2015, 29 per cent of respondents agreed or strongly agreed that they trusted financial advice, down from 40 per cent in 2014. And, in 2015 almost twice the number of people now think that advice is “only for the wealthy,” compared to when the survey was done in 2012 (28 per cent versus 17 per cent).
“You don’t need to be rich to enjoy the health and happiness benefits that being in control of your finances can deliver. In fact, it isn’t about what you have, it’s what you do with it that matters,” added Wealands.
A full copy of the white paper is available to download at: RaboDirect.com.au/FHB/.
RaboDirect is the straight talking savings bank, part of Rabobank Australia. As savings specialists RaboDirect is passionate about helping customers achieve their savings goals, through a range of high interest savings accounts and competitive term deposits.
RaboDirect is a division of Rabobank Australia Limited, part of the Rabobank Group, one of the world's leading specialists in food and agribusiness banking. Rabobank has more than 115 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness.
1ASFA Retirement Standard, June Quarter 2015 (https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/super-contributions/how-much-is-enough)