Not So Black and White

The proportion of Australian households struggling to make ends meet has fallen marginally over the past six months despite a further rise in interest rates in August, according to new CoreData research completed last week.

The numbers doing it tough remains high however with 46.2% of households running into debt, having to draw on savings or just managing to make ends meet on existing income levels – in March the figure was 52.2%.

The economy may be close to full employment but the notion of a two speed economy is very real with only 24.1% of households – up from 17.6% in March – finding it easy to build up their savings.

The latest research, which includes an assessment of the debt stress and interest rate tolerances of Australian households, comes six months after putting the same series of questions to thousands of households in March – a period which saw a further 0.25% rise in interest rates.

The September research involved 2,583 individuals nationwide while the March program covered 3,077.

Households feel slightly better off now than they did back in March, but the findings still show the majority of households feel worse.

In September, one in three households (35.5%) said their financial situation was better than it was 12 months previously, yet almost half of all households (45.5%) believe there are now worse off.

This compares to figures of 28.9% (better off) and 48.1% (worse off) back in March 2007 when respondents were asked to compare their financial situation with the same point in time a year earlier in March 2006.

For the financial services industry the situation creates both a conundrum and an opportunity for groups with a broad range of products and services to offer.

The conundrum is where and what products to promote and who to promote them too given the spectrum of financial situations Australian households find themselves in.

On the one hand large proportions of the population are making leaps and bounds in growing their wealth while others find themselves in debt and struggling to get ahead.

In between these two ends of the continuum are a whole series of grey hues – enough to keep any marketing and sales manager busy for the foreseeable future.