Australians engaged in investing for their future after COVID: FPA’s Money & Life Tracker – COVID Edition
Australians are more determined than ever to plan financially for life after COVID, with 70% of Australians believing they could have done better or different to improve their financial position, according to new research out today by the Financial Planning Association of Australia (FPA).
Marking the start of the 20th Financial Planning Week in Australia (5-11 October 2020), FPA’s inaugural Money & Life Tracker: COVID edition, provides a snapshot of the money and life issues consumers are facing six months after the pandemic hit, and looking at areas where they need help.
The research found that job insecurity, depletion of savings, and loss of super were the most common financial worries for Australians. It also showed that a quarter of Australians flagged high levels of stress about their financial position, with a third (30%) ‘feeling okay’.
Four in ten confirmed losing income because of COVID-19 and are either struggling to make ends meet (11%) or dipping into savings to get by (31%). Among those who have lost income and finding it difficult to keep up with expenses, a majority are Victorians (15%) and Gen Z (18-24 y/o) (18%).
Job insecurity was highest among women (40% compared to 29% men) and those living in Victoria (40%), whereas those aged 35-44-years old were most concerned about paying off their mortgage.
However, just under half (46%) of those surveyed felt they were in control of their financial position, and one in 10 said they are in a better position financially as they have been able to save money due to working from home and cancelled holidays.
Dante De Gori CFP®, CEO of the FPA said: “Financial Planning Week is all about inspiring Australians from all walks of life and ages to consider their personal finances and find out how having a financial plan will give you greater peace of mind and security.
“The Money & Life Tracker has shown us two distinct groups of Australians: those who lost income and were forced to dip into savings to get by; and those who were able to save money either because they felt in control of their financial position or were cautious of what the future holds.
“One thing that stood out was that those who had a financial planner by their side were able to cope more confidently than those who didn’t. In light of that, we encourage as many Australians as possible to take advantage of Financial Planning Week to consider their circumstances and think about what they want to achieve in their life, financially and otherwise, and explore what an FPA qualified financial planner could do to help them”, he added.
Australians turning hindsight into foresight
The research found that 70% of Australians believed they could have done something differently to improve their financial position.
One in five said they could have put cash aside for a rainy day and 17% think they could have controlled impulse buying. While some believe they could have focused on paying down debt more quickly, others believe they missed the boat during the stockmarket crash in March as an opportunity to invest.
When asked about changes they’re willing to make post-COVID, “Be more frugal about my lifestyle choices” ranked first, followed by “pay down debts” and “create a budget to understand what I’m spending and saving”.
“We all know that hindsight is a wonderful thing,” said Mr De Gori. “The COVID-19 pandemic has demonstrated the need to prepare for the unexpected. Understanding your current financial situation and short and long-term financial goals – in other words having a financial plan – means you can better manage your finances allowing you to live your today, while making sure your tomorrow is planned.”
Financial plan: a key to weathering the storm
The Money & Life Tracker picked up that one in five Australians have engaged a financial planner – either in the past or currently – and 13% of Australians are considering seeking financial advice to strengthen their financial position post COVID-19.
Of those Australians with a financial planner, the majority are in their wealth accumulation phase i.e. between 35 and 55 years old.
They have not been financially impacted compared to Australians without a financial planner and almost all (87%) did not need to access their super early. Half of these advised Australians also believe they wouldn’t have done anything different financially.
Among the majority of Australians without a financial planner, almost a third think they can ‘do-it-themselves’ with the help of family, friends or online resources. Nearly 20% are holding back from engaging a financial planner due to their misperception that they don’t have enough assets or investments to engage one.
“2020 has been a year of reflection and learning, and there are a lot of key takeaways for how consumers can better manage their financial situations on the other side of the pandemic,” said Mr De Gori.
“The research has shown that Australians who’ve planned for tomorrow experience greater peace of mind and wellbeing today. They are clearer on what they can spend and save and will sleep peacefully at night knowing that they have someone there to help them understand it all.
“The value of a financial plan has never been more important due to the experience of the pandemic and now that Australia is officially in recession after 29 years. Those who are in receipt of professional financial advice are, well-guided and well-engaged with their money and will make better decisions and get better results for themselves and their loved ones.
“Financial Planning Week is the perfect time for you to take positive steps toward controlling your financial wellbeing – now and into the future.”
Simple steps for those who want to make 2020 the start of a long-term commitment to financial success:
• Start a ‘COVID-proof’ plan. Use the pandemic as an opportunity to harness the positive financial habits picked up during COVID. In other words, keep the COVID mindset even after COVID is over. Prepare two lists:
1) expenses you don’t need any more and
2) where you can better utilise this money e.g. save, invest, pay down debts or spend somewhere more appropriate
• Think ahead. Work out where you want to be financially in the future (think 5 years, 10 years or retirement) and work backwards for how to get there, along with a timeline of achieving certain key milestones along the way
• Make an appointment with an FPA qualified financial planner. To help match you with the right financial planner for you, go to moneyandlife.com.au.
For more information on Financial Planning Week and financial planning, please visit Money & Life. To connect now with a financial planner, use the FPA’s Match My Planner service to reach a CFP® professional, or search the online Find a Planner directory.