Is money holding back your happiness?
New research from the Commonwealth Bank and Melbourne Institute has measured financial wellbeing to better understand the health of Australians.
The challenges of managing personal finances and putting enough money aside to ensure their financial futures are weighing on the minds of a significant number of Australians and holding back their happiness in life, according to a new benchmark measure of financial wellbeing released by Commonwealth Bank and the Melbourne Institute: Applied Economic & Social Research at the University of Melbourne.
The CBA-MI Financial Wellbeing Scales combines people's own perceptions about financial outcomes alongside banking data to show the drivers, barriers and behaviours linked to positive financial wellbeing across both "self-reported" and "observed" scales.
The research defines financial wellbeing as the extent to which people both perceive and have financial outcomes in which they:
- meet their financial obligations
- have the financial freedom to make choices that allow them to enjoy life
- have control of their finances
- have financial security â€“ now, in the future, and under possible adverse circumstances
Almost one-third of Australians (31 per cent) said they were not on track to secure their financial future, with one in four people surveyed admitting they do not enjoy life because of the way they are managing their money.
Nearly one-quarter (23 per cent) say they were struggling with money management and almost one-third (29 per cent) said their lives were often or always controlled by their finances.
About one in three respondents has low financial resilience, with 31 per cent observed with a low savings balance and 37 per cent saying they couldn't handle a major unexpected expense. In addition, the next generation of retirees might be at risk, with one-third (33 per cent) saying they were not on track to secure their financial future or provide for future needs (32 per cent).
However, the research found that, across the nation, the results are mostly positive; two-thirds of respondents have high financial wellbeing in either their self-reported or observed scales, with one-third having high financial wellbeing in both scales.
"Financial wellbeing is a complex issue," CBA executive general manager of digital Pete Steele said.
"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 â€“ and helping to improve â€“ their financial wellbeing."
Melbourne Institute professor David Ribar said he was confident that the Financial Wellbeing Scales will be a valuable tool for policymakers, financial institutions, service providers, researchers and the public for many years to come.
"By combining both self-reported financial wellbeing data and objectively observed measures, the scales provides dimensions of understanding that represent a first in its field, internationally," he said.
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