The pandemic’s impact on our financial views
This week is Financial Planning Week, a national initiative designed to raise awareness about how FPA members can help Australians to access financial advice for life. Some of the stats the industry has put together are quite interesting.
In Australia, the pandemic has served as a wake-up call to many Australians about how they manage their finances and how to prepare better for a future marked by the possibility of further outbreaks and their ongoing effects.
Nearly one in four people said they were somewhat stressed by their financial situation, and 17% said their situation had worsened in the past 12 months.
More men indicated they would have had a financial plan in place, whereas more women have indicated not splashing as much money on takeaways and non-essential items.
When it came to goals for the next 12 months, respondents were almost evenly split between hitting a savings goal, and the desire to take a holiday after 18 months of limited freedoms. More were leaning towards hitting a savings goal as their priority. That goal is shared by men and women but is strongest in those aged 30-44.
Holidays were the second-top priority across the ages and genders, nominated by 44% of total respondents.
To me, these stats flag a nervousness about the future. They suggest we’ve become more cautious about spending our money, and the repeated lockdowns have instead encouraged us to squirrel money away for a rainy day, or the next pandemic.
Despite the significant pull to extravagant holidays to help shake off the lockdowns, this financial conservatism is probably a good thing. Hopefully this period of relative hardship has taught a greater number of people the importance of saving!
In other news, yesterday the RBA said rates would remain on record lows until “at least” April 2024. In complete contrast, New Zealand’s central bank has increased their official cash rate from 0.25% to 0.5%, which could signal the beginning of the end of the global stimulus cycle.
The bank said cost pressures were “becoming more persistent” and it was following other central banks in reducing monetary policy stimulus.