• Print this page

Impact of financial situation

Current financial situation

This section examines the impact of an individual’s financial situation and how they have attempted to address this. The impact of financial and cost of living pressures is represented in how people reconcile and manage limited and stressed financial resources.

Compared to 12 months ago, over half of the respondents felt their financial situation was worse or a lot worse, with 29 per cent indicating that there was no change in their financial situation (Chart 12a).

“I feel lost and don’t know what to do.” - Respondent comment

"My family tries to help out as much as they can and vice versa. This year has been very difficult on my family and myself and I just feel very overwhelmed.” - Respondent comment

Feelings about future financial situation

In relation to how respondents viewed their future financial situation, 35 per cent reported feeling positive and very positive about the next 12 months. One quarter (26%), however, felt that there would be no change in their financial situation, and one third (33%) reported that their financial situation would continue to be negative (Chart 12b).

“I have found it very difficult in the last week because I had my electricity cut off and had to use my whole pension to pay and get it back on. Because it was off I had to throw out a whole lot of food and am now struggling to replace it all for me and my children.”  - Respondent comment

Consequences of current financial situation

Chart 13 provides details on what respondents have had to do or have felt as a result of their financial situation in the past 12 months. Two thirds of respondents reported cutting down on basic necessities and over half of respondents had gone without meals (51%). Comments from respondents reinforce this data and also reveal that parents go without meals in favour of their children.

Over half reported delaying payment of utility bills (58%) and 30 per cent reported delaying rent or mortgage payments.

Sixty five per cent of respondents reported feeling stressed about their future prospects, and almost a third noted conflict with family as a direct result of their current financial situation.

“Gone without meals? Only myself, not my kids.” - Respondent comment

“Feed my children but went without meals myself.” - Respondent comment

“It’s embarrassing and uncomfortable to ask friends for help or let them know how much I am struggling financially. I don’t like to ask unless the situation is desperate.” - Respondent comment

Respondents also noted efforts to supplement their income through selling or pawning possessions (41%), taking on new debt through credit cards and loans (23%) and gambling (6%). Almost two thirds (63%) had approached welfare or community organisations for help and over half had asked for help from friends and family.

Limited economic resources place limits on the capacity of respondents to fund risk mitigation measures such as having savings, home contents or car insurance. Without such options, respondents have limited capacity to respond when things go wrong, often resorting to increasing debt which they cannot afford, and borrowing from family and friends or asking for assistance from community based organisations. The risk for many is a further shift into deprivation. Indeed, in a recent report by The Salvation Army, “I wish I’d known sooner!” [1] , the level of debt of people accessing financial counselling through the community support services and Doorways Centres was alarming:

“32% of all respondents reported owning debt of $20,000 or more while the median amount of debt owned was $5,000 to $10,000.”

“Women were more likely to owe money for bills associated with running a household (e.g. utilities and ITC). Men more often struggled to repay money owing on loans (payday and personal) and mortgages.” (p.2)

Overwhelmingly, individuals and families who accessed emergency relief services for assistance are unemployed and in receipt of income support payments – two of the key indicators for economic poverty. Further, the majority of these people are experiencing severe levels of multiple deprivation, that is, they are doing without many of the essential everyday items that most of the Australian population takes for granted. Consider that 56 per cent of the survey cohort are living without 10 key items simultaneously, it can be concluded that for any of these individuals they:

  • Generally can’t afford a substantial meal once a day (but will make sure their children are fed)
  • Generally have poor standard housing – guttering in poor condition, poor security, etc.
  • Can generally afford to get to the doctor (bulk billing) but cannot afford to pay for prescriptions
  • Don’t have savings, so are constantly anxious about things breaking down and items needing replacement etc
  • Don’t have insurances for home contents or their car
  • Can’t afford regular social contact with friends
  • Can’t buy presents for family members birthdays

[1] Brackertz, N (Dr) (2012) I wish I’d known sooner! The impact of financial counselling on debt resolution and personal wellbeing. Report commissioned by The Salvation Army Australia Southern Territory and undertaken by Swinburne University of Technology.