How our behaviours shape our finances

The secrets to improving financial wellbeing may be found very far away from conventional interventions which focus on improving financial literacy, skills and knowledge, according to a new study.

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The report, Financial Wellbeing: a survey of adults in Australia/New Zealand, measured the financial wellbeing of 5,099 adults across the two countries. Fifty-nine out of 100 was the average financial wellbeing score for adults in both. 

"Neither planning nor monitoring ones finances seemed to promote better financial wellbeing.” - Kempson

Respondents received scores for three components of ‘overall financial wellbeing’:

  • the ability to meet financial commitments;
  • the extent to which they felt comfortable with their current and future financial situation; and
  • their ability to cope with a significant unexpected expense or fall in income. 

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This survey found detailed knowledge and experience of financial products or services had only limited direct influence on financial wellbeing

You can read ANZ’s full coverage on its Financial Wellbeing report HERE.

In contrast, two key behaviours had a more profound, direct impact on a person’s financial wellbeing, across a range of income brackets.

The two key behaviours might sound simple - active saving and not borrowing for everyday expenses – but the impact of these was significant, with wide implications for the financial services sector (in particular personal finance), government, social services, marketers and a range of policy makers.

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The ANZ survey found active saving and not borrowing for everyday expenses were associated with a significant increase in the financial wellbeing of Australian respondents, at higher and lower income levels.


The findings add further evidence to a growing body of international research which shows, regardless of people’s knowledge, other factors such as psychological influences, social and economic circumstances and the ability to actually take action (i.e. behaviour) are more important influences on financial wellbeing.

“It's encouraging that a large percentage of the wellbeing factors are things that we can do something about - and help people,” Dr Simon Peel from New Zealand’s Commission for Financial Capability says.

The surveys showed in a broad range of demographic/income segments, practicing active saving and not borrowing for everyday expenses could increase financial wellbeing by more than 26 per cent. 

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In New Zealand, not borrowing for everyday expenses could significantly increase wellbeing in a range of income brackets.

 “This calls for a wider range of financial capability interventions that enable behaviour change,” Professor Elaine Kempson of the University of Bristol and Oslo Metropolitan University, who has worked with ANZ for over a decade on its series of financial literacy and capability surveys, says.

“This will require policymakers to take a more holistic approach to building financial capabilities ­– creating interventions that tackle issues around personality rather than just knowledge.”


Dr Pushpa Wood, director of Westpac Massey Fin-Ed Centre, has long attested knowledge alone does not encourage people to change their behaviour.

 “It is great to see this now being widely accepted,” she says. “In my view, people working in this field [both public and private sectors] and the funders need to shift their focus from reporting on ‘reach (number)’ to impact (change of behavior).”

The survey found having less than $A1,000 in savings was associated with low levels of financial wellbeing. Many Australians and New Zealanders surveyed had no savings at all.

“At every income level, we need more active saving,” Kempson says.

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The survey findings highlight difficulties with the traditional, knowledge-based view financial literacy can be taught and, once taught, will have a positive impact on people’s financial behaviour.

Robert Drake, now Director of SmartSteps and formerly of Financial Literacy Australia, likens financial behaviours to those around food and eating.

“Many people want to lose a bit of weight, and know they will lose weight if they eat fewer calories,” he says. “The people who lose weight are the people who carry out the behaviour – they eat fewer calories (I am not one of them)!”

Drake says more research is required on structuring financial products and services which will encourage the appropriate behaviours, preferably by default.

“In the financial services sector, especially among financial experts, there is a very widespread view that knowledge is key,” he says. “So they try to sell people stuff. This is counter-productive.”

Good Shepherd New Zealand Operations Manager Microfinance Clementine Ludlow has seen first-hand what interventions can improve financial wellbeing.

“Sometimes it’s the simplest of things that can change the way people see their finances and act on them,” she said. “Sadly, knowing how to manage your money isn’t always obvious. I, like many, have had to learn the hard way.”


The survey utilised the financial wellbeing model developed by Kempson, who is widely regarded as a pioneer in the field of financial wellbeing research globally.

“The findings suggest if financial wellbeing in Australia and New Zealand is to improve, the focus needs to be on how people actually use their money, not just how they manage it,” she says. “[Especially] since neither planning nor monitoring ones finances seemed to promote better financial wellbeing.”

The spending habits of Australian millennials have been under scrutiny recently. One particular behaviour, a love of spending $A22 on smashed avocado breakfasts, is seen as the kind of habit which gets in the way of saving for more lasting investments such as a first home deposit.

This behaviour trait is so influential Time magazine has made an avocado toast calculator, which calculates how much avocado toast you would have to give up to buy a home.

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Jokes aside, the ANZ survey tackles personality and habits rather than how much a person knows about fully franked dividends or earnings per share. The survey included questions such as: 

How well do these statements fit you personally?

  • ‘I run short of money because I overspend
  • ‘I am impulsive and tend to buy things even when I can’t really afford them’ 

“The survey findings show that we are on the right track,” ASIC’s Senior Executive Leader, Financial Capability, Laura Higgins says. “We are asking the right questions.”

Higgins, who was on the Australian steering committee for the survey, sees financial wellbeing as a ‘long game’. It is not something we ‘fix’ and she sees the survey as highlighting work required to build the financial wellbeing of particular groups such as women, small business owners, young people and sole-parent households.

“The shift from financial literacy to financial wellbeing is a continuum of research that will lead to greater understanding of the variables that make up better financial decision-making and wellbeing.”

Behavior change

The surveys highlighted the impact of a variable income on financial wellbeing. People in both Australia and New Zealand who had considerable variation from month-to-month in their household income recorded financial wellbeing scores of 41 in Australia and 44 in New Zealand, well below the national average in both nations of 59 out of 100.

“We have to recognise that behaviour change is really important, but that will always be moderated by income,” Kempson says.

Those whose income did vary were more likely than average to be self-employed (23 per cent in Australia and19 per cent in New Zealand).

“We need to further examine the financial wellbeing of those who are in small business or part of the gig economy,” Higgins says.

“This is a fundamental change in the employment market over the last 15 years and creates new risks for financial wellbeing.”

Consumer Action Law Centre CEO Gerard Brody says the survey reflects the financial pressures on small-business owners.

 “The gig economy … is pushing the costs of business ups and downs onto individuals,” he says.

Brody suggests further research into the financial wellbeing of small business owners and gig economy workers is required.

“What makes people vulnerable is the very challenge of managing complex income and expenditure variables,” he says.

There was an over-representation of women in the group with more variable income (58 per cent females/42 per cent males in Australia; and 56 per cent females/44 per cent males in New Zealand.

“There are implications for gender inequality and urgency for efforts to reduce the vulnerability of women,” Professor Roslyn Russell from RMIT University says.

There are particular challenges around improving the financial wellbeing for people living with disability or chronic health conditions, she says.  

For Dr Wood, real improvements in financial wellbeing won’t happen overnight, -or from one-off workshops.

“It is an ongoing, long-term process and, as such, planning for any intervention needs to take this into account,” she says.

From Dr Wood’s experience, “money can only buy you comfort, not your happiness and neither can it buy your wellbeing.”

“You will have to work on it,” she says.

Emily Ross is an author, journalist and editor

Gerard Brody, Laura Higgins, Robert Drake, Dr Pushpa Wood, Dr Simon Peel and Professor Roslyn Russell were invited to contribute insights as members of ANZ’s external steering committees for this research. ANZ acknowledged their contribution to the research through a donation to their nominated charity.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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A survey of adults in Australia and New Zealand