News

A major study of 450 Sydney residents has found that more households are plunging into debt and families are finding it harder to escape the clutches of the financial downturn compared to two years ago.

The Wesley Report Financial Stress: The hidden human cost reveals almost half (47 per cent) of Sydney households are not saving and one in eight (13 per cent) are on the verge of insolvency by spending more than they earn.

The findings have prompted the CEO of Wesley Mission the Rev Keith Garner to call for a sustained national financial literacy campaign to bring about effective, long- term cultural change in addition to the Commonwealth Government’s major overhaul of the finance and lending sector.

The Wesley Report also found:

• A growing number of households are struggling to meet expenses
• Almost one in three (30 per cent) would struggle to meet an increase of $160 per month in accommodation expenses – up 17 per cent from 2006 when Wesley Mission conducted its first financial stress report.
• More than one in four (27 per cent) respondents had found it very difficult or impossible to pay off the credit cards in the past 12 months.
• The number of people who would have to make a major sacrifice to raise $2000 at short notice has almost doubled in the past two years (up from 10 per cent in 2006 to 18 per cent in 2008);
• There was a 5 per cent increase in the number of people who could not raise $2000 in an emergency between 2006 and 2008.
• There was a 3 per cent increase in the number of people who needed to borrow money from family and friends and a further 10 per cent increase in those who were unable to pay household bills on time.
• Financial stress also had a broader impact on people: 70 per cent of respondents who were stressed over finances experienced greater stress in other aspects of their lives.
  o one in five families (21 per cent) could not enjoy the yearly ‘circuit breaker’ – the family holiday away from home – due to financial pressures
• Single parents are bearing the brunt of financial stress:
• Two in five could never or almost never afford to pay the entire balance on their credit cards, compared to only 23 per cent of couples with or without children.
  
• Financial stress had a severe impact on the health of single parents (66 per cent) and their ability think clearly (75 per cent).
  
• Opportunities to relieve stress were more limited for single parent households: 38 per cent missed out on a holiday for just one week in the year and 35 per cent could not afford a night out even once a month.
• Despite the increase in financial stress, fewer people sought help from a professional financial advisor in 2008 (21 per cent) compared with 2006 (23 per cent), only 3 per cent of people sought assistance from a financial counsellor and one in ten took no action at all when confronted with problems.

Mr Garner said it was crucial that more and some immediate action was taken to curb this dire situation where on a daily basis there were more families finding themselves at financial breaking point.

“Be it government, business or the broader community, we all need to play a part in helping those in financial stress before this situation gets even worse,” Mr Garner said.

“While Wesley Mission welcomes the Government’s actions to overhaul the finance and lending sector to give greater protection to the vulnerable in our community, it is essential that financial literacy and education become mainstream rather than being parked on the margins of social concern.

“We need a sustained campaign tailored for various points of need in the life cycle and aimed at different demographic groups such as teenagers, young families, the elderly, migrants and people from non-English backgrounds. Structural reform and cultural change must go hand-in-hand.

“A sustained campaign should guide people as they manage finances during various life phases such as a period of unemployment, the birth of a child, the purchase of a car or house or in the case of a divorce.

“In the interim - particularly given that unemployment is set to continue to rise – there is also an urgent need for a greater number of financial counsellors in Australia, to assist households who are experiencing financial stress.

“Last year, we were forced to turn away 2424 people from Wesley Mission's Financial Counselling service and right now, there is at least a two-week waiting list to see a financial counsellor - yet some of these people are facing the threat of losing their homes.”

Financial Stress: the hidden human cost can be downloaded from: www.wesleymission.org.au/financialstress

• Graeme Cole    
  Public Affairs and Research Manager
  Ph: 02 9263-5350  
  Mobile: 0408 470 722


• Dinoo Kelleghan   
  Public Affairs Officer
  Ph: 02 9263-5545  
  Mobile: 0434 076 644