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The path from financial apathy to confidence

05:44pm April 20 2021

Financial apathy is one of the biggest issues the Davidson Institute has confronted in its 10 years of existence. (Getty)

Consumers are decidedly upbeat, the latest Westpac-Melbourne Institute Consumer Sentiment Index coming in at an 11-year high – a result labelled as “extraordinary” by the bank’s chief economist Bill Evans. 

But as confidence recovers, will people retain positive behavioural changes, like reducing discretionary spending and increasing savings, developed during the pandemic? Or will a spending surge materialise from pent-up demand, reversing much of the savings progress that Australians have made? 

As the Davidson Institute this week celebrates our 10-year anniversary, I believe there’s never been a more important time to help Australians better manage their money and build their financial confidence as we gradually come out of this truly remarkable once in a century event. 

For some people and businesses, their financial position became more vulnerable and they had to adapt. 

Several are still struggling, whether it’s the many Australians who stopped receiving JobKeeper last month and have lost work, or the many businesses impacted by ongoing restrictions, such as those in tourism and accommodation and events. 

For others, savings surged as they were stuck at home unable to spend. Remarkably, in a year when Australia suffered its worst downturn since the 1930s, the household savings ratio reached 18.7 per cent of net disposable income in the September 2020 quarter, before easing back and ending the year at 12 per cent. In dollar terms, an extra $200 billion found its way into bank accounts last year. 

So where to from here? 

In my years with Westpac’s Davidson Institute, one of the biggest issues we’ve faced as financial educators is cutting through people’s indifference to money matters, be it learning about money or making financial decisions on how their money could be used better. Key examples of this financial apathy include when people don’t know their level of debt, credit score or their number of subscription services and cost.  

In addition, people often put off financial goal setting, saving sufficiently for emergencies, managing credit card debt or thinking about retirement planning early. All these things can have an impact on long-term financial wellbeing.

So, what causes financial apathy? 

For some, it may be cognitive overload. Having a lot on your mind impairs decision-making and the world of personal finance may seem overwhelming. Rather than asking for help, concerns are often pushed down the list, resulting in inaction.

For others, it could be a feeling of fear that stops them from making financial decisions. For example, the fear of making a bad investment or not having enough money to start or not knowing how to get started.

Social media also plays a role. 

The curated lifestyles that we see day in day out can cause FOMO, or the “fear of missing out”, which may lead to impulsive spending. Social media sites also have powerful advertising tools, including targeted posts based on people’s demographics and even behaviours, and seamless shopping experiences – which can further encourage impulsive spending.  

The good news is that financial apathy does not define you. It’s not an immovable state. 

Studies from the University of Florida show that the more people perceive themselves as emotional thinkers – those who tend to form quick opinions based on their feelings – the higher their tendency to avoid or neglect their personal finances. The study found that these emotional thinkers were less likely to have worked out how much they needed to save for retirement or know the fees and interest rates on their credit cards.  

But the study also found that these participants were less likely to avoid financial decisions when those choices were reframed as decisions about their lifestyle. 

With a small tweak and time, it’s possible people can tackle a money matter they have been avoiding. 

It starts with picturing the positive outcome they’re trying to achieve, rather than the putting off the decision they’re facing. Although it may take some extra effort for non-visual thinkers, visualising a goal helps people make it real and build a deeper emotional connection to it. 

It can also help increase the likelihood of taking action to achieve the goal. 

So, picture the future goal you want to achieve and work steadily towards achieving it. And remember, there’s plenty of free resources online to demystify what can be intimidating and complex topics for many people, such as the government’s Moneysmart website or the Davidson Institute

Yes, it requires some time and effort. 

But it’s worth it – there’s few things we’ve become more certain of in the past decade than that.

The views expressed are those of the author and do not necessarily reflect those of the Westpac Group.

The information in this article is general information only, it does not constitute any recommendation or advice; it has been prepared without taking into account your personal objectives, financial situation or needs and you should consider its appropriateness with regard to these factors before acting on it. Any taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. You should also consider obtaining personalised advice from a professional financial adviser before making any financial decisions in relation to the matters discussed.


Lali Wiratunga is Chair of 50PLUS, a Westpac Employee Action Group which aims to create a supportive culture around the diverse needs of mature age employees. He also serves as Chair of Plate It Forward, which donates restaurant-quality meals and provides training and employment opportunities to vulnerable community members. 

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