A recent research study conducted by consumer education website, CreditSmart, has found that Australians are taking charge of their financial well-being despite the challenges posed by shifting personal finances. The research analysed the credit habits, attitudes, and behaviours of nearly 1,500 Australians, and highlighted the remarkable level of resilience and determination in the face of rising cost-of-living concerns.
The research found that 85 per cent of Australians have experienced significant shifts in their personal finances within the past six months, with 66 per cent attributing their financial stress to the increasing cost of living. In the face of these pressures, Australians are taking proactive steps to directly address their financial challenges.
Credit reporting expert at CreditSmart, Geri Cremin, explained that many Australians are reflecting on their spending habits and carefully scrutinising their personal budgets and expenses. In fact, 90% of respondents who reported feeling financial stress have taken proactive steps to improve their financial situation.
Over the past 12 months we’ve seen a significant increase in the number of Australians checking their credit report, with 58 per cent having now reviewed their report, compared to 50 per cent in the previous August 2022 survey.
“It’s also good to see that young people are leading the way in this space with 15 per cent of millennials checking their credit report in the last 12 months whereas only three per cent of baby boomers have conducted this kind of review,” Ms Cremin says.
Positive shift in open conversations on personal finances
According to the CreditSmart research, conversations around financial support are becoming increasingly entrenched in our daily lives, whether through personal connections or professional advice.
Within the lending space, 57 per cent of loan holders said they needed assistance on their loan repayments from their lender in the past 18 months, a significant increase from 45 per cent recorded in August 2022. In examining the data, CreditSmart also found that 67 per cent of Millennial loan holders reported needing assistance on their loan repayments in the past 18 months, compared to 56 per cent and 38 per cent of Gen X and Baby Boomer loan holders, respectively.
“Young people are often the most impacted by rising living costs and it’s heartening to see they are contacting their lenders in the face of problems. While we know there is no silver bullet to ease the cost of living, we do expect if young Australians continue this trend of reaching out for help, it will improve outcomes and bolster overall confidence in credit health.,” Ms Cremin says.
“In addition, having open conversations with their banks will effectively protect consumers by ensuring that their financial situation better illustrates their current credit concerns, while ensuring greater transparency with their lender,” Ms Cremin added.
Taking better care of our credit health
“As interest rates rise and the cost of living continues to escalate, an increasing number of people who have never previously faced vulnerability are grappling with financial stress. In the current circumstances, educating yourself about your credit health has never been more important,” Ms Cremin says.
“Better understanding your financial situation means learning how to properly take stock of your situation. It also means learning how important it is to be cautious when considering quick-fix credit products or solutions, which may exacerbate financial strain rather than alleviate it.
For those who are experiencing payment difficulties, it’s important to contact your lender as soon as possible. They may be able to provide a repayment plan or financial hardship assistance to support you through these challenging times,” Ms Cremin added.
Here are three tips to help Australians manage their credit health:
- Prioritise mental health and well-being. If financial stress is impacting your mental health, reach out for free mental health support (Lifeline 13 11 44; Beyond Blue 1300 22 4636).
- Communicate with your lender if you’re struggling to make your monthly repayments on time. Financial counsellors are also available to provide free and confidential help (National Debt Helpline 1800 007 007).
- Understand your credit report. This means check your credit report and understanding the information in it, and tracking your payment history and credit use to make informed decisions about managing your credit.