A new Galaxy Research report commissioned by debt solutions company Fox Symes shows some pretty interesting findings about the financial habits of everyday Australians – with more than half admitting they struggle to manage their money. Yikes!
According to the report, more than half (52%) of Australians admit they are not always good with money, do not know how to budget well and do not know how to live within their means.
While this is a concerning figure, when you consider the growing amount of personal debt owned by Australians and the fact that most people who are retired rely partially or totally on the government aged pension, it’s not an altogether surprising piece of information.
The report also highlights a divide between the genders when it comes to following a budget. 41% of men and 44% of women (42% overall) say that they are not always successful when they attempt to budget, and 9% of women and 10% of men (9% overall) admit that they are not good with money in general.
Perhaps more concerning still is fact is that this is becoming an intergenerational issue, with younger generations appearing to have a declining capacity to stick to a budget. Of the Gen Y population, 64% are failing to manage their money, compared to 53% of Gen X and 42% of the Baby Boomers.
It’s starting to sound like a recipe for disaster, right? Well you’re not wrong, but the issue doesn’t end there. Not only does the lack of ability to effectively manage money have the potential to cause financial hardship and limit future opportunities, the report also suggests that these habits can cause conflict in people’s personal relationships.
The figures show that 52% of all people with a partner are at risk of relationship problems caused by one being more of a spender, and the other being more of a saver. Whether you’ve been in this situation yourself or you know of someone who has, it’s a well-documented fact that financial disagreements can be one of the biggest strains on a personal relationship.
Of the remainder of couples, 40% say both they and their partner are good savers and 8% that they are both spenders and struggle to manage and reduce their debt.
Add children in to the mix and things become even more challenging, with reports that of households with children under the age of 18, 58% have difficulties living within their means. Of households without children, only 48% struggle to live within their means.
What the findings don’t report on is why. Why are women falling behind their male counterparts when it comes to budgeting? Why are the younger generations of today failing to match the money management skills of their parents? And why is more than half of the country struggling to make sound financial decisions?
There’s likely to be a whole host of contributing factors with no singular answer, but the good news is that it’s never too late to break bad habits.
Here are our top tips to help you and your loved ones stay on track with managing money:
-Don’t expect to do it blindly. Create a plan with purpose, and set goals to anchor your spending habits.
-Set up a “play money” account, and work an allowance into your budget. What’s in the account is yours to spend on whatever you like, and what’s not is hands off!
-Make decisions together with your partner, and consider having the better operator take the leadership role when it comes to managing the finances. Think about sourcing a third party to facilitate the process.
-Start teaching your kids about managing money from a young age. Remember, they’re watching your every move!
-Check out the Australian Securities and Investment Commission’s free online resource, Money Smart to brush up on your knowledge.
If you’re looking to learn more about how to manage your money wisely, give us a call on 03 9600 2124 to set up an appointment with one of our friendly financial planners.