24th September, 2018
A new study measuring ‘financial consciousness’ saw NSW residents gain one of Australia’s highest average marks, despite only scoring 52.4 out of 100, which was just behind ACT’s score of 52.5.
There is a direct relationship with low scores and poor financial wellbeing overall, with 27 per cent of NSW residents found to be financially vulnerable, which are those who underperformed in the study’s combined financial wellness and financial consciousness components. This implies nearly 1.73 million people across NSW feel little job security, regularly struggle to pay household bills and are unable to put savings aside.
Proportionally, NSW has the second lowest number of financially vulnerable residents, again behind only the ACT which has 23 per cent. However, given the state is home to more people than anywhere else in Australia, on a pure numbers basis it has more residents at financial risk than anywhere else.
In the ongoing battle of the states, NSW rated higher than Victoria, scoring 52.4 on the Financial Consciousness scale versus 50.4. Victoria also houses a higher proportion of financially vulnerable people than NSW at 30 per cent.
Comparethemarket.com.au General Manager of Banking, Rod Attrill said: “NSW residents, who enjoy some of the country’s highest average incomes and an unemployment rate well below the national average – 4.7 per cent versus 5.3 per cent* – appear to be more attuned to their finances than the rest of the nation. However, it’s not all good news, with business confidence taking a slide and wages looking very flat, growing only 2.1 per cent over the last year, putting additional pressure on a large cohort of financially vulnerable people.
“Despite NSW achieving the country’s second-highest score on average, when in context, results are still relatively poor, indicating a widespread lack of confidence in people’s own belief in their ability to improve their future financial situation.”
The Financial Consciousness Index (FCI), which was commissioned by comparethemarket.com.au and developed by Deloitte Access Economics, tested 3,000 individuals nationally to uncover their ability, willingness and sophistication to make a change to improve their financial wellbeing.
Results were weighted for a score out of 100, placing them into one of five groupings associated with different levels of financial consciousness. Scoring less than 35 placed respondents in the lowest category: ‘Don’t know what they don’t know’, whereas scoring between 35 and 45 saw them in ‘It’s a blur’. The average Aussie is deemed ‘Conscious’ by scoring between 45 and 55. Those ‘Rising up the ranks’ scored between 55 and 70, and the ‘Financially Enlightened’ scored over 70 points.
“Determining a person’s ‘financial consciousness’ can help form decision makers’ views on how to tackle much broader public policy problems. If people do not feel empowered or able to improve their financial situation, then this has obvious effects on the economic health of NSW as a whole.”
Major contributing factors that affected a person’s FCI score include their age, income, gender, location, education, and whether or not they own their own home.
On average, NSW women scored 50, whereas men scored 54.7, reflecting a range of inherent social factors such as women being less likely to be in full-time work, and therefore more likely to have lower superannuation balances.
Across the country, South Australia and Tasmania were in joint last place on the Financial Consciousness scale, scoring an average of 49.9 each.
“There is a clear relationship between people’s FCI score and their overall financial wellbeing and sentiment. Sixty per cent of NSW residents said they have struggled to pay their household bills at some point. There is also ongoing considerable concern about holding down a job, with 40 per cent saying they either worry about or feel very little job security. Also looking back, 28 per cent of NSW residents said they are now less confident in their ability to retire comfortably at 65 compared to this time last year.
“By commissioning this report, we hope to capture the attention of a range of stakeholders, including consumers, businesses, and public policy makers. Undoubtedly, we feel it demonstrates that many NSW residents need greater education, empowerment and understanding to enable them to take tighter control of their everyday finances,” said Rod.
* Seasonally adjusted
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 The Financial Consciousness Index (FCI), which was commissioned by comparethemarket.com.au and developed by Deloitte Access Economics, tested 3,000 individuals’ belief in their ability to influence their financial outcomes, as well as their willingness and sophistication to make a change to improve their financial wellbeing.
 This figure represents 27% of the estimated NSW resident population over the age of 15 as at December 2017, ABS