16 October, 2012
Research from The Salvation Army released today, Tuesday 16 October, shows financial counselling services make a real difference to people experiencing severe financial hardship. While the report indicates that many Australians are experiencing extreme financial difficulty - with 41% of survey respondents experiencing harassment from creditors – the benefits of financial counselling are clear with 66% of people saying that financial counselling resolved their financial difficulties.
The report, I Wish I’d Known Sooner, completed by Dr. Nicola Brackertz of the Swinburne Institute at Swinburne University and commissioned by The Salvation Army, highlights the responses of 225 participants who had accessed the financial counselling services of The Salvation Army this year 94% of respondents said that they would be willing to seek help sooner in the future, recognising that early intervention is an effective strategy to financial stress spiralling out of control.
'This report shows the many benefits of financial counselling. The respondents said that this service had helped them improve their skills in prioritising debt, has assisted them avoid legal action and enabled them to access creditor’s hardship programs,' said Captain Jason Davies-Kildea for The Salvation Army.
'We believe it is critical to be able to offer people support like financial counselling to help address issues before they become much more difficult to manage, and this research project support this,' said Captain Davies-Kildea.
Responders to the survey indicated that their financial trouble was severe and long standing, often caused by low income due to retrenchment, unemployment or under-employment and inadequate levels of government allowances causing them great amounts of stress. 33% indicated having over $20,000 in debt and 14.7% indicated that their debt came from five of more sources predominantly from utility debts, credit and/or store card debt, telephone/internet debt and personal loan debt. Financial counselling makes great progress into alleviating this stress however, with 69% of those who had received financial counselling indicating they felt more positive about the future.
'Financial stress extends well beyond the household budget, impacting housing security and relationships. However, with financial counselling 51% of respondents felt their housing situation was more secure and 45% of respondents saying that their relationships with family and friends also improved,' said Dr Nicola Brackertz of The Swinburne Institute and the researcher of this study.
'As part of this report we are recommending that financial counselling services should be expanded and also integrated into a holistic approach to assisting struggling families,' Dr Brackertz said.
The report’s analysis of the impact of financial counselling indicates that its benefits extend further than a person’s ability to pay off their debt. 63% felt their mental and emotional wellbeing had improved as a result of financial counseling and 45% of responders noted a positive effect on their physical health as a result of financial counseling.
In 2011, The Salvation Army provided financial counselling services for 9,357 clients across Australia. “The demand for these services currently outstrips our ability to deliver, resulting in waiting lists and in some cases having to turn away clients. We support the research reports’ recommendation for maintenance and expansion of financial counselling services” said Captain Jason Davies-Kildea from The Salvation Army.
'We want to encourage people to address financial stress early and seek the support of a professional financial counsellor before debt and anxiety build. It is clear that early intervention is the best prevention to further financial hardship,' said Captain Davies-Kildea.
- 94% of respondents indicated that they would be willing to seek help sooner in future
- 72% of respondents who had been in financial difficulties for a year or less reported fewer stressors and were likely to indicate that their difficulties had been resolved as a result of financial counseling
- 69% of respondents now felt more positive about the future following financial counseling
- 41% of respondents had experience harassment from creditors
- 64% of respondents indicated they could not afford dental treatment if needed
- 32% of all respondents reported owing debt of $20,000 or more, whilst the median amount of debt owed was $5,000 to $10,000
Download I Wish I’d Known Sooner report here .
Roslyn Russell - School of Economics, Finance and Marketing
A National Perspective: Increasing Access to Financial Counselling
'I wish I'd known sooner!' The impact of financial counselling on debt resolution and personal wellbeing