Cost-of-living, unaffordable advice fuels financial stress: Surveys

Even with more potential interest rate cuts in the works, Australians feel as though their financial situation is in dire straits as many struggle with the cost-of-living crisis and do not know the best place to seek financial advice, new surveys reveal.

One survey from MLC conducted by McCrindle found that only one third (34%) of participants feel confident about managing their finances.

Confidence was lowest amongst those aged 46-60 (29%), with women less likely to describe themselves as financially confident compared to men (29% compared to 39%).

Struggling mortgage holders could potentially see repayments decrease with the Reserve Bank of Australia (RBA) lowering the official cash rate to 3.85% last week.

Finder head of consumer research Graham Cooke said two rate cuts may not be enough to ease the spike in mortgage stress since the cash rate accelerated in May 2022.

"But it's a step in the right direction and it's great news for homeowners. It's two down and maybe two more to go this year," he said. "On an average home loan, if your bank passes on both rate cuts in full, you could be saving almost $2600 per year."

MLC chief customer officer Renee Howie said while everyone's financial journey is different, the need for financial clarity is universal.

"The reality is, not everyone is able to access financial advice. That's why it's so important to meet people where they are and provide them with relevant tools to help build their confidence and take control of their finances," she said.

Incidentally, MLC has launched Money View, a digital tool that helps users budget, track expenses and financial goals, and provide values on a home or investment property.

"Tools like MLC Money View are a game changer for everyday Australians who genuinely want financial clarity but perhaps aren't sure about where to start," she said.

Australian Council of Social Service (ACOSS) chief executive Cassandra Goldie said the latest rate cut is "hugely important for people on low and modest incomes who have been worst affected by financial pressures."

"We need further cuts to allow incomes to grow and reduce extremely high levels of financial stress amongst people with the least," she said.

"The priority now should be to grow jobs and the incomes of people struggling after a decade of stagnation in living standards. Low unemployment is an opportunity not a risk. Reducing it further will not spark a fresh outbreak of inflation as some have wrongly suggested."

Meanwhile, Colonial First State's (CFS) survey of 2250 Australians found one in five (20%) want to break the cycle of living paycheck to paycheck.

The cost of living remains the top concern as 42% said they'd be unable to cope financially for more than three months if they lost their job or unable to work.

CFS superannuation chief executive Kelly Power one in five men and one in three women say their mental health has been negatively impacted by their financial situation.

"At the same time, an overwhelming number of Australians are crying out for access to help, guidance, and advice. We believe these findings need to be part of the national conversation about getting the right financial guidance to those who need it most," she said.