Most households treading financial water
Casual workers are significantly more likely to experience financial stress, struggle to save and experience difficulty renting or purchasing a property according to a new report released by ME Bank.
The ME Bank Financial Comfort Report found that 53 per cent of households don’t have any cash left over at the end of the month, with 43 per cent breaking even and 10 per cent spending more than they earned by drawing on savings, loans, credit or equity in their homes.
The Index also found that comfort with 'cash savings' was lower than most other financial components measured by the Index – comfort with cash savings was scored at only 4.90 out of 10 in June 2012.
Despite the bleak results, Australians' rated their overall financial comfort across all 11 Index measures at 5.39 out of 10, a significant improvement from 5.20 in October 2011, indicating financial comfort overall is improving.
Mr Jamie McPhee, CEO ME Bank, said the findings indicate large segments of the Australian population are finding if difficult to save from current income.
"A savings buffer is critical if households lose an income and unsurprisingly it is those households who have low comfort with their level of savings who also report they would struggle to manage if they lost their income."
"Single parents are particularly vulnerable with 43 per cent indicating they would not be able to maintain their lifestyle for a fortnight compared to 20 per cent of couples with young children, 16 per cent of couples with older children, and 9 per cent of retirees," Mr McPhee said.
The Australian Council of Trade Union’s (ACTU) Secretary, Dave Oliver, said the findings show that people in insecure work are particularly vulnerable in the current economic climate.
“About one in five Australian workers are employed casually, and are not only missing out on basic workplace rights but are suffering financially,” Mr Oliver said.
“At work, casuals do not have access to paid leave, have no job security, and can experience wide fluctuations in their rostering and income. This is bleeding into their lives outside of work.
The survey found that comfort with savings and household income was linked to fears about job security. Other findings include:
- Almost half (48%) of casual workers were likely to spend all their income on essential household expenses with nothing left over, compared to 36% of full-time employees.
- Only 5% of casuals were likely to be able to save any money after paying essentials, compared to 15% of full-timers.
- 35% of casuals are very or somewhat uncomfortable with their household income, compared to 21% of full-time employees.
- Over 40% of casuals felt insecure in their job, compared to 24% of full-time employees; and 66% said they would have difficulty finding another job within two months if they became unemployed.
The full report can be found here