Financial stress due to COVID-19 easing but still rife

Financial stress due to COVID-19 easing but still rife

Money worries due to COVID-19 are easing for many households, but not everyone is out of financial strife yet, a new survey from the Australian Bureau of Statistics (ABS) showed.

Financial stability is being restored for many, with 72 per cent indicating that their household finances saw no changes, an ABS survey of about 1,500 people in mid-September found, up from 66 per cent in mid-June.

But some are still not out of the woods yet. Sixteen per cent believed that they were financially worse off due to COVID-19 in the month leading to the poll, a fall from the 19 per cent in mid-June.

One in eight felt that their financial position had improved, down from one in six three months earlier.

Boosted personal finances were put to good use. Nearly 30 per cent of Australians either increased their savings (22 per cent) or reduced their debt (7 per cent). Fifteen per cent managed to do both.

But a staggering 49 per cent were not able to grow their savings or cut down on debt.

A larger proportion of families with children appeared to be facing tough financial situations, compared with those without kids.

“Circumstances were different for some households, with more than one in five (21 per cent) of households with children reporting their household finances had worsened in the four weeks leading up to the survey, compared to 14 per cent of lone person households and those without children,” ABS head of household surveys, Michelle Marquardt, said.

Financial relief

Nearly 20 per cent said their household had taken at least one measure to help pay for everyday expenses between mid-August and mid-September.

This is a substantial increase from the 14 per cent who took steps to make ends meet in the May to June period.

Of those who took some financial action in the September period, 9 per cent dipped into their accumulated savings or term deposits, while 4 per cent reduced their home loan repayments.

One in 10 Australians were receiving the coronavirus supplement, a fortnightly $550 welfare payment that was lowered to $250 on September 24.

About a third of those on the benefit said they mainly used the payment on household supplies, including groceries.

The money went towards paying the mortgage or rents for 28 per cent of welfare payment receivers.

Of those receiving the supplement, 12 per cent were aged between 18 and 64, while 3 per cent were aged 65 and above.

Rise in aggression due to financial stress

The findings come as aggression surged among financial distressed people, Financial Mindfulness’ latest Financial Stress Index (FSI) report indicated.

People who were “always acting aggressively towards others because of their financial position” ballooned by more than eight times since before COVID-19, according to the report, which put together the findings from a survey of 363 adults in the year to August 2020.

More than 2.2 million Australians are financially stressed to the point that their wellbeing and capacity to function is compromised.

Those who felt that they could not grow their savings jumped by 22 per cent compared with pre-pandemic days.

Survey participants who always found it hard to wind down due to their financial situation swelled by 151 per cent.

About 70 per cent of poll participants felt “financial shame” due to their money worries, while many either ignored their situation (63 per cent) or spent money recklessly to deal with the stress (62 per cent).

More than two thirds said financial stress has had a negative impact on their relationships, and 64 per cent got into conflicts with their loved ones.

Financial Mindfulness founder and chief executive officer, Andrew Fleming, said money-related stress levels have seen an upswing since COVID-19 hit.

“Financial stress was a significant problem before the COVID-19 pandemic, but we now can see the increased damage it is having on individuals and work productivity,” he said.

“It is staggering to see how much financial stress is impacting mental and physical health, relationships and work.”

The FSI was researched and developed by neuropsychologists and financial experts to understand how financial stress affects wellbeing.

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With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

What is an ANZ locked savings account?

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With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

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As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

What are the requirements for opening Commbank multiple savings accounts?

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If you’re not a current Commbank account holder, you’ll need an Australian driving licence, birth certificate or passport and Medicare card. You may also have to visit a branch if your identity cannot be confirmed online. 

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

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Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

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How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

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What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

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