Saving for a rainy day harder in crisis

The COVID-19 pandemic has had devastating impacts for so many people across the world.

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The consequences of the virus will unfortunately be long lasting, both from a psychological and economic perspective.

" Understanding how Australians are feeling about their finances is more important than ever as we grapple with the economic effects of COVID-19.”

Economically, we know the effects of the COVID-19 virus are wide ranging and mean large and small businesses, families and individuals will all be affected in many and varied ways.

Measuring and better understanding Australia’s financial wellbeing increases in importance when a once-in-a-generation pandemic like this strikes – not only for banks and the financial services industry, but more broadly for society.

The ANZ Roy Morgan Financial Wellbeing Indicator provides a statistically robust snapshot of the personal financial wellbeing of Australians.

The latest research explains how the financial wellbeing of Australians has fallen from a pre-COVID-19 level of 60.7 to a post COVID level of 56.5 (on a scale of zero to 100), with around 14 per cent of people feeling less comfortable about the future. The report also shows almost half of young Australians have been financially impacted by COVID-19.

We know financial wellbeing contributes significantly to someone’s overall health and wellbeing, community connectedness, and economic and social participation.

Financial wellbeing is defined as the extent to which a person is able to meet current commitments comfortably and have the financial resilience to maintain this into the future. Improving the financial wellbeing of our customers is at the heart of ANZ’s strategy.

Financial wellbeing declined across all dimensions from March to May 2020 – those “feeling comfortable” were down 13.7 per cent, those “meeting everyday commitments” declined by 5.5 per cent and those who have “resilience for the future” fell by 1.9 per cent.

Young Australians have been the most financially impacted by COVID-19 with 44 per cent of young singles and 36 per cent of young families saying they’ve been stood down from work or had their income or hours reduced, compared with 27.3 per cent of of those 40 and older.

Prior to COVID-19, more than a third of young people and families said they had less than one month’s income in savings. The average income young people had saved prior to the pandemic was 2.4 months and for young families 2.8, compared with 6.5 months saved by older families.

While these insights are sobering – and somewhat expected in the current environment - we need to focus on what we can do to improve the financial wellbeing of Australians.

Checking in

Research indicates budgeting and saving are two key behaviours that contribute to higher financial wellbeing. To this end, we’ve created the ANZ Financial Wellbeing ‘Check In’ – a new tool designed to give Australians the practical support, knowledge, advice, tips and tools to get back on top on their money and improve their financial wellbeing.

The Financial Wellbeing Check-in includes four simple things you can do to feel more in control of your finances. It’s free and fully accessible online – and you don’t have to be an ANZ customer to access it. The Check-In has a range of tips and tools to help you plan your spend, lower your fixed expenses, eliminate unnecessary expenditure and set up an emergency fund. 

Of course, many customers are still experiencing continued personal and business impacts right now, and we’re offering a range of support packages to customers who are experiencing ongoing financial difficulty due to COVID-19.

While the past few months have been incredibly difficult for so many people, we know taking action to improve our collective financial wellbeing will benefit ourselves, our families, and our communities.

Understanding how Australians are feeling about their finances is more important than ever as we grapple with the economic effects of COVID-19. It’s difficult to gauge how deep the economic impact will be or when and for how long we’ll be in recovery mode.

Alexis George is Deputy CEO at ANZ


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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