Financial resilience in Australia 2015

1. Context
2. The study
3. Key findings
4. Points to consider

Context

This study was one of the first detailed studies to be published about financial resilience in Australia. It aims to move beyond traditional measures of financial exclusion to a broader multi-dimensional framework of financial resilience.

‘Financial resilience in Australia 2015’ is part of a five-year project seeking to develop a multi-dimensional framework for financial resilience, measure financial resilience in Australia and identify vulnerable population groups. This report provides the first year of analysis and seeks to conceptualise financial resilience and determine people’s levels of financial resilience in Australia.

Subsequent phases of this project will seek to:

• develop a methodology to measure financial resilience in Australia and identify vulnerable groups;
• measure levels of financial resilience in Australia;
• develop a shared impact measurement tool to determine which interventions/programs are most effective for different groups and to help inform resource investment.

The study

Findings for this report are based on a national online representative survey of adults aged 18+ in Australia . Results are based on 1,496 interviews responses from August 2015 and are weighted to be representative of the adult Australian population.

A multi-dimensional framework and survey, based on a workshop and a detailed literature review, conceptualises financial resilience and focuses on four components:

1. economic resources
2. financial products and services
3. financial knowledge and behaviour
4. social capital.

Survey responses are used to determine where people’s resources lie based on a financial resilience spectrum: severe financial stress/vulnerability, high financial stress/vulnerability, low financial stress/vulnerability, and financial security.

Regression modelling also explores the independent association between factors and the overall financial resilience.

Key findings

The study provides a detailed breakdown of financial resilience based on a large variety of demographic and social factors. Key findings include:

• Overall, 10.4% of Australian adults experience severe or high levels of financial stress / vulnerability. A further 53.2% face a low level of financial stress and 35.7% are financially secure;
• The population is most vulnerable on the financial knowledge and behaviour component;
• There is a strong level of interaction between the four components, with individuals who are most at risk of low levels of financial resilience experiencing low levels of resources across multiple components. For example, people with low levels of financial knowledge and behaviours are more likely to have low economic resources (61.2%, compared with 29.5% of the population), access to financial products and services (19.8% compared with 5.7% of the population) and low social capital (29.0% compared with 10.4% of the population);
• Based on regression modelling, people who are significantly more at risk of severe or high financial stress/vulnerability are: - aged 50-64 - pessimistic - are likely to have a serious mental illness - not in the labour force, or are unemployed or underemployed - living in social or student housing;
• Similarly, people less likely to be in severe or high financial stress/vulnerability are: - aged 18-24 years - optimistic - home-owners - more educated.

Points to consider

Generalisability/transferability: this study looks specifically at the financial resilience of people living in Australia. While the current data set is robust, it may not be appropriate to generalise these findings for other countries as there are different cultural norms and initiatives which might affect resilience. Applicability: the conceptual framework of financial resilience presented in this study will be of interest to those looking to explore financial resilience in the UK.

Full report

Financial resilience in Australia 2015 - full report