The Commonwealth Bank and the Melbourne Institute: Applied Economic and Social Research at the University of Melbourne, released a new benchmark measure of financial wellbeing of it stating weighing on the minds of a large number of Australians is their challenges of managing personal finances and putting enough money aside to ensure their financial futures.
What is the CBA-MI financial scale?
The scale combines banking data and peoples’ perceptions about financial outcomes. The unique concentration of the individuals perception with the banking data reveals the barriers, drivers and behaviours that are linked to positive financial well being across both ‘self-reported and ‘observed’ scales.
Financial wellbeing defined
It is both the extent to which people both perceive and have financial outcomes in which they are able to meet their financial obligations as well as have financial freedom to make choices that allow them to enjoy life as well as have control of their finances. It also relates to having financial security both presently and in the future as well having ‘back up’ for times life throws a curve ball and an individual is faced with adverse circumstances.
However, it has been revealed that 31% of all Australians feel that they are not on track to secure their financial future. Adding to this finding, a quarter of the people surveyed for the study admitted that because of the way they manage their money, they are not enjoying life as they would like.
Having their lives controlled by their finances is contributing to the decline in financial wellbeing, with 23% of people feeling as though they are struggling with their money management.
The black cloud looming over the financial wellbeing of many Australians continues to loom as a third believes that they have low financial resilience, low savings being a major contributor adding anxiety amongst those surveyed as they recognise that not only could they find themselves facing hardship should they encounter an unexpected expense, but also 33% fear that they are not on track to secure their financial future as well as foreseeing an adverse future as they are unable to provide for future needs.
Although it may seem high with a third of Australians reporting that they don’t have a positive outlook on the financial wellbeing, this also means that the results are actually more positive than not with two thirds of the respondents regarding themselves as having high financial wellbeing in either their self- reported or observed scales and a third having high financial wellbeing in both scales.
CBA executive GM of digital, Pete Steele, states “financial wellbeing is a complex issue. The scales research is a significant contribution to the conversations about what financial wellbeing means in Australia.
“We have an ambitious purpose to improve the financial wellbeing of our customers and communities, but we know there’s no ‘one-size-fits-all’ approach to financial wellbeing. This is the challenging part when it comes to measuring – and helping to improve – their financial wellbeing.”
Professor David Ribar of Melbourne Institute believes that the Financial Wellbeing Scale will become a valuable tool for many people and different entities including policy makers, researchers, as well as the public. The wellbeing data has opened up a new avenue of understanding; the first in its field internationally.
Kofkin Bond strives to create individual plans that emphasizes the Financial Wellbeing of the clients. By taking the holistic approach and truly understanding the clients wants, needs and circumstances, Kofkin Bond and Co ensure that they on the Wellbeing Journey of their clients for the unforeseeable future.