Aussies understand money better than last year: research

COVID-19 has reinforced in Aussies the importance of being financially aware and prudent.

The Financial Consciousness Index (FCI), commissioned by comparethemarket.com.au and developed by Deloitte Access Economics, tested 3015 individuals for various factors that contribute to financial consciousness, from financial willingness through to financial capability.

This year, Aussies collectively lifted their mark to a passing grade, just, scoring 51 out of a hundred compared to 48 out of a hundred last year.

The improved result has been put down to financial hardship wrought by the COVID-19 pandemic, forcing people into conservative spending habits as job insecurity increases and incomes decrease. Driving this point home, this year Aussies have on average saved 10% more of their income than they did in 2019.

"While some Australians may have adopted more responsible savings habits over the last year, the reality is that the nationwide shutdowns drastically minimised the chance for discretionary spending," says David Ruddiman from comparethemarket.com.au.

"Restaurants, bars, retailers and entertainment services were either not operating, or operating on tight restrictions, so many Aussies had less opportunity to spend on non-essentials. This resulted in more money left over after paying bills and the ability to contribute more to savings."

Nonetheless, consumer confidence has taken a big hit.

"The financial hardships stemming from the bushfires, COVID-19 pandemic, the subsequent shutdowns, and Government benefits continues to be tough for many Australians. These events have also significantly affected confidence in Australia's economy."

The report also found that financial consciousness peaks at 35-44 years.

"Your 30s and 40s are commonly the life stage in which you are exposed to new financial products and decision-making - such as buying a home and getting a mortgage - which require you to have a deeper understanding of financial concepts and how various factors impact your finances. This increases one's level of financial consciousness as they are forced to become more aware, than younger or older generations."

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