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The financial wellbeing of Australians has defied expectations of a downturn amid the COVID-19 pandemic, hitting an all-time high according to the latest research from Commonwealth Bank.
The research, which analysed data from over five million customers over the year to March 2021, found that the metric for Australians' financial wellbeing has risen by 7.8% to 51.1. This was the highest level and the largest annual improvement ever recorded since the scheme started in 2017.
Furthermore, there was a significant growth in the financial outcomes of Australians over the past year, with 17% fewer customers spending at "high levels" and 16% fewer customers "frequently living pay-check to pay-check".
"While clearly there are people struggling or worse off from the pandemic, more Australians feel better off, more financially secure and more in control of their finances," said Ben Grauer, executive manager for financial wellbeing at Commonwealth Bank.
Grauer said this latest research reflect how financial wellbeing is more closely linked to financial behaviours, rather than how financially knowledgeable customers are or how much they earn.
"Spending less, saving more and paying down debt have been the big stories from this past year," he said.
The research shows that the median annual savings balance of Australians increased by $1,115. This supports the idea that consumers have reduced their spending and have taken a more cautious strategy on their finances amid uncertain times.
Grauer said this meant that fewer families are financially struggling. In fact, the research indicated a 5.5 percentage point drop in the proportion of Australians considered to be "just coping" or "having trouble".
"Pleasingly, we also recorded improvements across the top two categories in the financial wellbeing scale, including a 6.5% increase in those Australians considered to be ‘getting by’; and a 28.3% increase in those who were ‘doing great’,” he said.
John de New, a professor at Melbourne Institute: Applied Economic & Social Research at the University of Melbourne, said several factors have contributed to the improvement of Australians' financial wellbeing.
On top of the list is the targeted and swift Australian government fiscal policy intervention, which includes the JobKeeper and JobSeeker. The low interest-rate environment is also a huge contributor as well as loan deferrals, and the emergency access to superannuation.
“These factors combined have been beneficial to Australians’ financial wellbeing, as they have allowed people to reduce their expenses and spending, and save more – thereby providing them with greater economic security at a time of widespread international insecurity and instability," he said.
