April 01, 2019
New research reveals that almost 40% of Australians say the rising cost of goods and services is their single greatest concern in 2019.
Mortgage Choice and CoreData’s upcoming Financial Fitness whitepaper explores Australians’ attitudes and behaviours towards their finances.
Mortgage Choice Chief Executive Officer Susan Mitchell said, “We asked Australians what was keeping them up at night and it was unsurprising to learn that the rising cost of living ranked high on their list of worries.
“When we asked Australians what specific concerns they had about their finances, most said the rising cost of goods and services and many respondents were also concerned they would not have enough money to be able to retire comfortably.
“The reality is that the wealth effect from falling property prices is weighing heavily on consumer sentiment, as people feel like their biggest asset - their home, loses value.
"The CoreLogic Hedonic Home Value Index revealed that national dwelling values fell 0.6% over March and have fallen a cumulative 7.4% since peaking in October 2017," said Ms Mitchell.
The Whitepaper revealed varied results cross the country. 58% of respondents in Queensland were concerned about the rising cost of goods and services, followed by 56% in New South Wales, 55% in Western Australia and 52% in Victoria.
The gender disparities in the research results were clear. Almost 60% of female respondents cited the rising cost of goods and services as their number one financial concern, compared to just over 50% of male respondents. Furthermore, almost 50% of female respondents were concerned that they were not going to be able to retire comfortably, compared to just under 43% of male respondents.
Ms Mitchell said, “It is not uncommon in relationships for one person to be assigned the role of the financial decision maker, however this can be problematic if they have limited financial knowledge, which could ultimately hinder the financial goals of not only the couple, but the individuals. It is crucial individuals take an active role in their own financial well being, whether they are in a relationship, or are single.
“Even today, women take time off work to start a family, and to care for extended family members who fall ill, which means they spend on average less time overall in the workforce, and as a result retire with less superannuation. This is compounded by the gender pay gap, which is currently at 21.3% among full-time employees according to the Workplace Gender Equality Agency.
“These factors combined mean women can be left financially vulnerable after the breakdown of a marriage, or death of their partner if they have not taken an active role in managing their finances. This is why it is paramount that each individual has a strategic financial plan in place to protect their future,” said Ms Mitchell.
Ms Mitchell stressed the importance of tailored financial advice for all individuals. “An effective financial adviser will start by asking you what life you want to live, and create a strategic financial plan that is suited to your needs today and into the future,” concluded Ms Mitchell.
1. Consider the life you want to live. This may sound like a daunting task but this should see you put pen to paper and write down what you wish to accomplish, whether that be buying a house in the short term, sending your children to school, caring for your elderly parents or loved ones, or living a comfortable retirement, which means different things to different people.
2. Gain a clear understanding of your living expenses. This means not only knowing how much money you are spending but on which areas you are spending it. This is one of the foundations of retirement as individuals need to know how much they are spending now in order to paint a picture of how much they will need into the future. Financial advisers will factor in the rising cost of living into your overall financial plan in order to prepare you for the rising cost of goods and services, typically 2-3% per annum.
3. Segregate your spending. Often it is the shock factor of having several large bills turn up at the same time that gives people the impression that life is getting more expensive. If you segregate your spending for expenses you know are a few months away, you can build a safety net and avoid future bill shock. For example, if you know your car registration is due in 12 months’ time and you know the amount, divide the amount by 52 weeks and set aside that amount in a separate bank account so you don’t feel like you suddenly need to come up with hundreds of dollars.
4. Know your level of risk. It is important to know how to invest your money. This is why speaking to a qualified financial adviser is key to working out an appropriate strategy, as simply leaving your savings in the bank may not give you the return you are seeking.
5. Do your research. Learning to manage your money is an important skill. The Mortgage Choice Financial Fitness Boot Camp is a free online educational program that helps you understand the fundamentals of financial wellbeing and learn strategies to get into better financial shape.