Financial stress due to COVID-19 easing but still rife

Money worries due to COVID-19 are easing for many households, but not everyone is out of financial strife yet, a new survey from the Australian Bureau of Statistics (ABS) showed.

Financial stability is being restored for many, with 72 per cent indicating that their household finances saw no changes, an ABS survey of about 1,500 people in mid-September found, up from 66 per cent in mid-June.

But some are still not out of the woods yet. Sixteen per cent believed that they were financially worse off due to COVID-19 in the month leading to the poll, a fall from the 19 per cent in mid-June.

One in eight felt that their financial position had improved, down from one in six three months earlier.

Boosted personal finances were put to good use. Nearly 30 per cent of Australians either increased their savings (22 per cent) or reduced their debt (7 per cent). Fifteen per cent managed to do both.

But a staggering 49 per cent were not able to grow their savings or cut down on debt.

A larger proportion of families with children appeared to be facing tough financial situations, compared with those without kids.

“Circumstances were different for some households, with more than one in five (21 per cent) of households with children reporting their household finances had worsened in the four weeks leading up to the survey, compared to 14 per cent of lone person households and those without children,” ABS head of household surveys, Michelle Marquardt, said.

Financial relief

Nearly 20 per cent said their household had taken at least one measure to help pay for everyday expenses between mid-August and mid-September.

This is a substantial increase from the 14 per cent who took steps to make ends meet in the May to June period.

Of those who took some financial action in the September period, 9 per cent dipped into their accumulated savings or term deposits, while 4 per cent reduced their home loan repayments.

One in 10 Australians were receiving the coronavirus supplement, a fortnightly $550 welfare payment that was lowered to $250 on September 24.

About a third of those on the benefit said they mainly used the payment on household supplies, including groceries.

The money went towards paying the mortgage or rents for 28 per cent of welfare payment receivers.

Of those receiving the supplement, 12 per cent were aged between 18 and 64, while 3 per cent were aged 65 and above.

Rise in aggression due to financial stress

The findings come as aggression surged among financial distressed people, Financial Mindfulness’ latest Financial Stress Index (FSI) report indicated.

People who were “always acting aggressively towards others because of their financial position” ballooned by more than eight times since before COVID-19, according to the report, which put together the findings from a survey of 363 adults in the year to August 2020.

More than 2.2 million Australians are financially stressed to the point that their wellbeing and capacity to function is compromised.

Those who felt that they could not grow their savings jumped by 22 per cent compared with pre-pandemic days.

Survey participants who always found it hard to wind down due to their financial situation swelled by 151 per cent.

About 70 per cent of poll participants felt “financial shame” due to their money worries, while many either ignored their situation (63 per cent) or spent money recklessly to deal with the stress (62 per cent).

More than two thirds said financial stress has had a negative impact on their relationships, and 64 per cent got into conflicts with their loved ones.

Financial Mindfulness founder and chief executive officer, Andrew Fleming, said money-related stress levels have seen an upswing since COVID-19 hit.

“Financial stress was a significant problem before the COVID-19 pandemic, but we now can see the increased damage it is having on individuals and work productivity,” he said.

“It is staggering to see how much financial stress is impacting mental and physical health, relationships and work.”

The FSI was researched and developed by neuropsychologists and financial experts to understand how financial stress affects wellbeing.

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