30th October 2018
A major national study has revealed that 76 per cent of Australians are concerned about the economic conditions and political landscape both locally and abroad, with confidence faltering when it comes to improving their financial outcomes over the next year.
The findings come from the Financial Consciousness Index, the first consumer study of its kind recently launched by leading financial comparison service comparethemarket.com.au and Deloitte Access Economics. The in-depth report measured the financial wellbeing and outlook of 3000 Australians, by testing their confidence across personal finances, broader economic conditions and the political landscape.
Leadership spills, international relations, the sliding Australian dollar, falling house prices and stagnant wage growth may be causing anxiety for three-quarters of the population. The report found that 74 per cent of Aussies worry about domestic economic conditions and 77 per cent are concerned about the current political landscape. A significant majority of respondents are also concerned about the global economy (76 per cent) and international politics and relations (80 per cent).
Australians’ pessimism surrounding the economy, and the uncertainty of political outcomes is influencing the confidence they have in their own personal finances. Over half (57 per cent) of respondents doubt that their finances will improve in the next 12 months. An additional two thirds (65 per cent) say their income will either be the same or worse off next year. This could be the reason why many believe their ability to pay off bills (67 per cent of respondents) and pay down debt (58 per cent) will also not improve.
Australians also believe their assets will be worse off or not change in the next year: 57 per cent do not believe the value of their investments will improve, nor the value of their home (47 per cent).
Rod Attrill, General Manager of Banking at comparethemarket.com.au, said: “The Index reveals the clear impact macroeconomics has on a micro level. The threat of continued out-of-cycle increases in interest rates which have a residual effect on household income are causing consumers to curb their spending. If someone is uncertain about their budget, job or income prospects, then they will typically reduce their spending to prepare for the future. Any uncertainty surrounding future government policy might hold people back from investing – all of these have knock-on economic consequences.”
Confidence in political and economic conditions also impacts the financial decisions Australians are making. The Index found only half of respondents think it is a good time to start saving money, a third (32 per cent) believe it is currently a bad time to buy a house, and 29 per cent say it isn’t a great time to be looking for a new job.
“Research has shown that when it comes to financial planning and saving, financial confidence and making deliberate choices to improve your future wellbeing are key determinates to positive financial outcomes – more important even than financial knowledge. It is important, then for consumers, businesses and policy-makers to understand the impact macro issues have on the financial decisions that everyday Australians make. Income, assets and jobs are the trifecta of issues currently testing Australians’ confidence, and it is ultimately up to each person to take tighter control of their finances to build their confidence when managing money.
Australians’ concern about current political and economic states
|Percentage of Australians that are concerned|
about macro issues
|Economic or political conditions||Percentage (%)|
|International politics and relations||80%|
|Global economic conditions||76%|
|Australian economic conditions||74%|
Australians’ confidence in their personal finances improving over the next 12 months
|Belief that personal finances|
will be worse off or stay the same in the next year
|Ability to pay bills||67%|
Comparethemarket.com.au is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, travel and personal finance products from a wide range of providers. Our easy-to-use comparison tool enables consumers to find products that best suit their needs and back pocket.
 Consumer Agency of Canada, 2016, ‘The link between financial confidence and financial outcomes among working-aged Canadians’, in comparethemarket.com.au, 2018, ‘Financial Consciousness Index’: https://www.comparethemarket.com.au/financial-consciousness/the-report/