The way people handle their money is having a significant impact on the health of Australians according to a new benchmark measure of financial wellbeing.
New research from the Commonwealth Bank and Melbourne Institute has measured financial wellbeing in an attempt to get a snapshot of the health of Australians.
Causing the most anxiety is the challenge of managing personal finances and being able to put enough money aside to ensure financial futures.
The CBA-MI Financial Wellbeing Scales include both self-reported and observed scales, that is, people’s own perceptions of their own financial outcomes and banking data.
Financial wellbeing in the research is achieved when people meet financial obligations, have the financial freedom to make choice to enjoy life, have control of their finances and have financial security now, in the future and in unforseen circumstances.
In the research, around a third of Australians said they were not on track to secure their financial future, and sadly around a quarter said they did not enjoy life because of the way they are managing their money.
Other key findings from the research were:
29% said their lives were often or always controlled by their finances
33% had low financial resilience
31% had a low savings balance
37% said they couldn’t handle a major unexpected expense
Pete Steele is the CBA’s executive general manager of digital and spoke to The Adviser about the research.
“Financial wellbeing is a complex issue,” he said.
“The Scales research is a significant contribution to the conversations about what financial wellbeing means in Australia.”
“We have an ambitious purpose to improve the financial wellbeing of our customers and communities, but we know there’s no ‘one-size-fits-all’ approach to financial wellbeing.”
Melbourne Institute’s David Ribar said the Financial Wellbeing Scale could be used by policymakers, financial institutions, service providers, researchers and you, the public.
“By combining both self-reported financial wellbeing data and objectively observed measures, the Scales provides dimensions of understanding that represents a first in its field, internationally,” he told The Adviser.