One third of Australians see incomes fall – many top up savings to prepare for the worst
A third of Australians have already been negatively financially impacted since the onset of COVID-19, and more expect to.
That’s the main finding from ME’s COVID-19 Financial Sentiment Snapshot commissioned this week.
Of those surveyed, 33% said their income had decreased since the start of the COVID-19 pandemic, while 67% said their income was unaffected (56% said their income had stayed the same; 11% said it had increased).
While only a third are currently facing the realities of a lower income, future sentiment is more negative, with around 44% of Australians ‘expecting the COVID-19 crisis to have a negative effect on their household’s finances long term’.
ME Money Expert, Mathew Read, said the new findings suggest there is a large group of Australians who may not yet have been affected, but are preparing for that to change.
Of those who said they are feeling negative about their finances during the current pandemic, 63% said it was because they ‘feel uncertain about the economy’, 40% said it was due to their ‘inability to save money and get ahead’, while 38% attributed it to ‘negatively impacted investments and/or super’ – rising to 45% among Baby Boomers.
In addition, many blamed employment concerns. The findings suggest 29% of Australians are feeling ‘insecure about their job’, while 20% ‘have taken a wage cut’ and 17% have ‘lost their job’.
|Question: You said you’re feeling negative about your finances. Why is this?|
|Uncertainty around the economy||63%|
|Unable to save money and get ahead||40%|
|My investments and/or super have been negatively impacted||38%|
|Spending more on essential items||35%|
|I’m feeling insecure about my job||29%|
|I have debts||26%|
|Unable to achieve my financial goals e.g. buy a home, take a holiday||23%|
|I’ve had to a take wage cut / my income has been reduced||20%|
|I’ve lost my job||17%|
|I have closed my business or about to||2%|
However, of those who said their incomes had either stayed the same or increased, a promising 47% said they were saving more than before the pandemic. Of those with affected incomes, a slightly smaller 34% said they were saving more.
“Many households tend to put money aside as soon as they feel financially uncertain,” said Read. “Having a financial buffer is a good idea as it provides peace of mind when it comes to paying bills, essentials, rent or a home loan.
“One saving grace of staying at home is that we’re spending less on activities such as going out to dinner or taking holidays. For some, the lockdown is forcing us to save.”
Among the Australians who recorded a decrease in income, around three quarters (72%) are choosing to cut out unnecessary expenses to deal with the change, 29% have sought government assistance, and only a quarter (24%) have drafted a personal budget.
“If you have a little extra time on your hands at home, take advantage of it and review your finances and personal budget. It pays to focus on what you can control and taking stock of where your money is going now, may really help your financial wellbeing in the future.”
|Question: You said your income has decreased … What have you done to manage this change?|
|Cut out unnecessary expenses||72%|
|Sought assistance from the government e.g. benefits||29%|
|Drafted a personal budget||24%|
|Saved more to create an emergency savings buffer||19%|
|Sought assistance from family or friends e g loans or free accommodation||13%|
|Switched or shopped around service providers e.g. power, gas, internet etc||11%|
|Sought assistance from my bank e.g. paused home loan or credit card repayments||9%|
|Switched or shopped financial products e.g. home loan, credit cards, savings accounts||8%|