‘Alarming’ number of Aussies cash-strapped
AUSTRALIANS are leaving themselves with no cash savings to fall back on in the case of an emergency, a new report has found.
Many households say they are doing it tough and swimming in debt, the National Australia Bank and the Centre for Social Impact's Financial Resilience in Australia report shows.
It analysed the financial situations of more than 2000 Australians and one in eight conceded they had no savings.
This is a real concern as households edge closer to Christmas which is typically the most expensive time of year.
About one in six people also said they were just managing to keep up with their debt repayments.
NAB's head of financial inclusion Elliot Anderson said it was worrying people often turned to credit such as payday loans or credit cards to tide them over.
"There's often alternatives that can end up putting you in an even worse situation," he said.
"Those who may be struggling … end up using some of the most expensive forms of credit to help them be able to manage or get through."
If Australians were forced to raise $2000 in an emergency, 81 per cent said they could, leaving 19 per cent unable to stump up cash urgently.
Mr Anderson said ideally Australians should have two to three months of living expenses worth of savings tucked away.
"It's about small changes in your day-to-day activity, where you can find the ability to put away five or $10 dollars, over time that starts to build up," he said.
"Incremental savings is the way to go."
Experts said having cash savings could also include being able to access a mortgage redraw account where they built a buffer up on their home loan.
As for keeping up with essential cost of living expenses such as power bills, groceries, water and clothing - one in six said they were struggling.
Consumer finance expert Lisa Montgomery said it was "alarming" so many Australians were sailing close to the wind and leaving themselves with no cash in the bank.
"If there is a crisis that requires cash then people are going to have to rely more on credit," she said.
"At this time of year there's normal bills but there's additional expectations on our household income to perform better such as paying for Christmas expenses."
- Visit ASIC's Money Smart website for tools and resources.
- Contact your bank or organisations as soon as you owe money you cannot repay.
- Ask about repayment options including financial hardship programs.
- Ring the National Debt Helpline on 1800 007 007.
- See if you are eligible for no-interest loans from organisations such as Good Shepherd Microfinance.
- Start a savings plan, even by tucking away $20 per week.