Economic optimism up as Aussies turn attention to personal budgets
20 January 2014
- National economic optimism up 4 points from 2013*
- 9 out of 10 proud to live in such a financially secure country and almost three quarters (74%) believe we’re making sound economic decisions
- Personal financial outlook still positive but softer than 2013, down 11 points
2 in 3 (65%) Australians believe the economy is in a strong position, with more than 85% of these believing this strength will continue for the next 5 years.
The second annual Westpac Australia Day Index revealed national economic positivity is up 4 points from 2013, led primarily by the belief that the country is making sound economic decisions (74%, up 12 points from 12 months ago).
The greatest strengths of the Australian economy were listed as tourism (60%) and resources such as mining and energy (60%), followed by Asian growth (40%) and agriculture (40%).
However, the report found that when it comes to personal finances, Australians are feeling slightly less confident than in 2013, with positivity dropping 11 points.
While 3 in 5 Australians are still optimistic about their finances, there has been a slight dip in positivity, driven primarily by a decline in ‘control over finances’ (down 10 points) and a sense that there are fewer opportunities available (down 24 points) such as financial independence, ability to create wealth and pursue the career they want.
Almost a third (27%) Australians feel their finances were out of control, with the top financial concern for 2014 cited as bills (25%), closely followed by saving and budgeting (24%). Westpac’s General Manager of Retail Banking, Gai McGrath, believes there are practical steps Australians can follow to help them to take control.
“After the summer holidays draw to a close and we celebrate Australia Day, it’s a good time to start thinking seriously about your financial priorities for 2014. The report revealed that the top priority for more than half (53%) of Australians is to save more, followed by making and sticking to a budget (41%),” said Ms McGrath.
Of the 3 in 10 who feel their finances are out of control, more than half (53%) plan on creating a budget to help them get back in control.
“It’s really positive to see that Australians are taking proactive steps to gain control of their finances. For those Australians who are still not sure where to start, the first step should be to get advice. Many Australians don’t realise the level of financial expertise that is available to them at their local bank branch so I encourage you to walk-in, talk to a banker and seek their professional advice. There’s also a huge range of digital tools that are simple and effective, such as an online budget planner, which can help people take back control,” said Ms McGrath.
Hints and Tips - Your 2014 Australia Day Budget
- The 50-30-20 Plan
It’s a tried and tested strategy, but it often falls by the wayside. Fifty per cent of your income should go towards fixed costs (e.g. rent, mortgage repayments, bills), 30% to discretionary items (e.g. entertainment, dining out) and 20% to retirement, savings and debt management.
- Follow the paper trail
Find every financial statement, bill or receipt you have to create an accurate picture of where your money actually goes each month. Most banks track this for you via online banking and you’ll simply need to download PDF statements on your accounts to review your spending habits.
- Establish your current financial position
Your financial position will be your income (wages, bonuses, investments) minus outgoing costs (debts such as your home loan, living expenses, insurance, super, tax and leisure), and it’s something all Australians should know about themselves. To find out, use a calculator, which can be found online. Westpac has a free Budget Planner
- Look to the future
Establish two sets of financial goals – one for the next 12 months, and the other for the next five years. Understand how much you will need to save per month to achieve both goals.
- Be realistic
Budgets are only as good as your ability to stick to them, and you should make allowances for rewards and unexpected expenses now and then to help keep you on track and engaged. Set yourself a target and reward yourself when you reach it.
- Make your money work for you
Whether through investing or an interest savings account, choose a return strategy that doesn’t allow your hard earned savings to sit idle, when it could instead be earning interest and increasing your balance.
Key Findings - 2014 Westpac Australia Day Index
Financial Outlook - Economic and Personal
- 2 in 3 (65%) Australians believe the economy is currently in a strong position, with more than 85% of these believing this strength will continue for the next 5 years.
- Nearly three quarters (74%) believe we are making sound economic decisions.
- 57% feel positive about their finances, however, overall Australians are feeling less confident when it comes to their personal finances than in 2013, with positivity dropping 11 points.
- Drop is driven primarily by a decline in ‘control over finances’ (down 10 points) and a sense that there are fewer opportunities available (down 24 points).
- 1 in 3 (35%) are concerned about their finances for the year ahead with bills (25%) cited as the top financial concern for 2014.
- 3 in 10 (27%) feel out of control of their personal finances. Of these, more than half (53%) plan to create a budget to get back on top.
- The number one financial priority for Australians in 2014 is to save more (53%) followed by making and sticking to a budget (41%), paying off their credit cards (19%) and their mortgage (18%).
Notes to editors
Source: The 2014 Westpac Australia Day Report was commissioned by Westpac Banking Corporation (WBC) (ABN 33 007 457 141) and conducted by Sweeney Research.
The research was conducted between 25 November and 2 December 2013, and interviewed 1,035 Australians.
The sample was weighted to ensure representation of the Australian population in accordance with census data provided by the Australian Bureau of Statistics.
*The 2013 Westpac Australia Day Report was released in January 2013; the research was conducted by Core Data who surveyed 1,000 Australians, from 12 December 2012 to 19 December 19 2012.
For a copy of the report, or further information regarding the methodology used, please contact Westpac Media Relations on 02 8253 9484.
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