To no-one’s surprise, a leading financial institution has found that Australians are experiencing financial hardship for the sixth consecutive quarter, but older Australians seem to be doing the best.
The NAB’s Consumer Insights report for the September quarter found that the number of Australians who experienced some form of financial hardship rose for the sixth consecutive quarter to 44 per cent – up from 36 per cent in the previous year.
More than one in four said their financial hardship was caused by not having enough money for an emergency and one in five by not having enough for food and basic necessities or being unable to pay a bill.
The report revealed that those experiencing financial hardship were highest among people aged between 18 and 29, at 56 per cent, followed by those in the 30-49 age group at 54 per cent.
For older Australians, the 50-64 age group remained unchanged at 39 per cent and the over-65 group fared the best at only 22 per cent.
Trending at all levels
“Despite these divergent trends, financial hardship levels trended above the average in all age groups in Q3,” the report stated.
This could be due to older Australians’ savings habits because, according to the report, nearly half of Australia’s accumulated savings are held by people aged 55 or over.
The figures could also be attributed to many older Australians owning their homes, as more people are requesting hardship assistance to repay their loans.
Speaking recently at the Australian Securities and Investments Commission (ASIC) Annual Forum 2023, senior executive leader strategic surveillance and data at ASIC Suneeta Sidhu revealed that there had been more than 430,000 hardship applications for loans from more than 170,000 customers since 2022.
“The data is showing that the number of hardship applications is increasing, with some lenders receiving more than double the applications they received this time last year,” Mr Sidhu said.
The number of Australians who missed a bill or loan payment continues to rise – to 27 per cent for the quarter compared to 20 per cent for the corresponding period last year.
Once again, older Australians fared somewhat better in this category.
By age, the number that missed a payment was highest in the 18-29 group (38 per cent vs 33 in the previous quarter), followed by the 30-49 group (36 per cent vs 32 per cent). It fell in the 50-64 group to 19 per cent from 21 per cent the previous quarter and was unchanged, and lowest by some margin, among people over 65 on 8 per cent.
People living in rural areas are continuing to record higher numbers of financial woes, with 60 per cent impacted in the past three months. That is almost twice as high as in capital cities where 34 per cent of people experienced some form of financial hardship.
Regional centres remained unchanged on the previous quarter at 56 per cent, but higher year-on-year with last year’s figure at 46 per cent.
And there’s not much improvement on the way for the economy, according to the Organisation for Economic Cooperation and Development (OECD), which is predicting average growth for the country.
In its economic outlook report, it predicts Australia will have a 1.4 per cent growth for next year and 2.1 per cent growth for 2025.
The OECD predicts that worldwide average growth will be 1.4 per cent for 2024 and 1.8 per cent for 2025.
In comparison, Indonesia’s economic activity is predicted to grow 5.2 per cent for both 2024 and 2025.
The OECD also predicts a mild worldwide slowdown next year.
“The global economy continues to confront the challenges of both low growth and elevated inflation, with a mild slowdown next year, mainly as a result of the necessary monetary policy tightening over the past two years. Inflation has declined from last year’s peaks. We expect that inflation will be back at central bank targets by 2025 in most economies,” OECD secretary-general Mathias Cormann said.
Do you think these figures reflect your situation? Have you had to cut back on anything in the past 12 months? Why not share your experience in the comments section below?