Exploring Financial Wellbeing in the Australian Context ... · Exploring Financial Wellbeing in the Australian Context iii UNSW Research Team Professor Kristy Muir, Dr Myra Hamilton,

EXPLORING FINANCIAL WELLBEING IN THE AUSTRALIAN CONTEXT

Final Report September, 2017

Muir, K., Hamilton, M., Noone, J.H., Marjolin, A, Salignac, F., & Saunders, P. (2017). Exploring Financial Wellbeing in the Australian Context. Centre for Social Impact & Social Policy Research Centre – University of New South Wales Sydney, for Financial Literacy Australia

Exploring Financial Wellbeing in the Australian Context

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Table of Contents EXECUTIVESUMMARY...............................................................................................................1

FINDINGS:WHATISFINANCIALWELLBEING?............................................................................................1WHATFACTORSINFLUENCEFINANCIALWELLBEING?.................................................................................3WHEREDOESFINANCIALWELLBEINGFITWITHOTHERTERMS?....................................................................4THEFINANCIALWELLBEINGTREE...........................................................................................................5HOWCANWEMEASUREFINANCIALWELLBEINGINANAUSTRALIANCONTEXT?...............................................6

INTRODUCTION.........................................................................................................................8THEISSUE.........................................................................................................................................8THECONTEXT....................................................................................................................................8WHEREDOESFINANCIALWELLBEINGFITWITHOTHERTERMS?....................................................................9THISPROJECT....................................................................................................................................9

RESEARCHMETHODS..............................................................................................................11WHATISFINANCIALWELLBEING?............................................................................................13

ANAUSTRALIANDEFINITIONOFFINANCIALWELLBEING............................................................................13WHATARETHEINFLUENCERSOFFINANCIALWELLBEING?......................................................19

OURECOLOGICALAPPROACH..............................................................................................................20INDIVIDUALINFLUENCERS..................................................................................................................21HOUSEHOLD,FAMILYANDPEERINFLUENCERS........................................................................................35COMMUNITYANDORGANISATIONALINFLUENCERS..................................................................................40SOCIETALINFLUENCERS.....................................................................................................................43

SOWHAT?ANAUSTRALIANMODELOFFINANCIALWELLBEING..............................................48WHATISFINANCIALWELLBEING?........................................................................................................48DOESFINANCIALWELLBEINGDIFFERFORDIFFERENTAUSTRALIANS?ALIFECOURSEPERSPECTIVE.....................49WHATSHAPESFINANCIALWELLBEING?.................................................................................................50THEFINANCIALWELLBEINGTREE.........................................................................................................50WHATDOESTHISMEANFORFINANCIALCOUNSELLORS,THEFINANCIALSERVICESSECTOR,ANDOTHERPOLICYACTORSANDSTAKEHOLDERS?.............................................................................................................51HOWCANWEMEASUREFINANCIALWELLBEING?....................................................................................56LIMITATIONS...................................................................................................................................56CONCLUSION...................................................................................................................................57

REFERENCES............................................................................................................................58


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UNSW Research Team ProfessorKristyMuir,DrMyraHamilton,DrJackNoone,DrFannySalignac,AxelleMarjolin,ProfessorPeterSaunders,DrMelissaWong,Professorkylievalentine,DrRebeccaReeveandDrJaneBullen.

Suggested citation Muir,K.,Hamilton,M.,Noone,J.H.,Marjolin,A,Salignac,F.,&Saunders,P.(2017).ExploringFinancialWellbeingintheAustralianContext.CentreforSocialImpact&SocialPolicyResearchCentre–UniversityofNewSouthWalesSydney,forFinancialLiteracyAustralia

Acknowledgements The research team would like to acknowledge and thank the participants and expertstakeholderswhocontributedtothisproject.

Wealsoextendourgratitudetotheproject’sSteeringGroupfortheiradviceandguidancethroughouttheproject.TheSteeringGroupmembersare:

FionaGuthrie ExecutiveDirector,FinancialCounsellingAustralia

ElaineHenry CompanyDirector,FinancialLiteracyAustraliaBoard

ProfessorElaineKempson EmeritusProfessor,UniversityofBristol

MilesLarby Senior Executive Leader (Financial Literacy), AustralianSecuritiesandInvestmentsCommission

AdamMooney CEO,GoodShepardMicrofinances

JaneNash GroupHeadofFinancialInclusionandCapability,AustraliaandNewZealandBankingGroupLtd

JolantaWillington Director(Financial),AustralianGovernmentDepartmentofSocialServices

The project team would also like to acknowledge and thank Laura Higgins (AustralianSecuritiesandInvestmentCommission)andVinitaGodinho(GoodShepardMicrofinance)fortheir advice and guidance, and Jozz Scott (Creative Produce), Abigail Powell (CSI, UNSW),NicolaHannigan(CSI,UNSW),RobertDrake(FLA),ClaudiaWeisenberger(FLA)andChristineEastmanfortheircontributionstotheproject.

Data collection for the survey componentof the researchwasundertakenbyRoyMorganResearch.

TheprojectwasfundedbyFinancialLiteracyAustralia


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List of Tables Table1:Amodeloffinancialwellbeing............................................................................................2Table2:Thethreedimensionsoffinancialwellbeing.....................................................................14Table3:Dimension1anditssub-dimensions.................................................................................15Table4:Dimension2anditssub-dimensions.................................................................................17Table5:Dimension3anditssub-dimensions.................................................................................19Table6:Summaryoffindingsfromtheresearch............................................................................21Table7:Financialbehavioursandtheirrelationshipswithfinancialwellbeing..............................26Table8:Amodeloffinancialwellbeing..........................................................................................49Table9:Examplesoftherolesdifferentstakeholderscanplayinsupportingandimproving

financialwellbeing..................................................................................................................55

List of Figures Figure1:Thefinancialwellbeingtree........................................................................................6Figure2:Thefinancialwellbeingtree......................................................................................50


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Abbreviations ABS AustralianBureauofStatistics

ACOSS AustralianCouncilofSocialServices

AHRC AustralianHumanRightsCommission

ASIC AustralianSecuritiesandInvestmentCommission

CPI ConsumerPriceIndex

CSI CentreforSocialImpact

GDP GrossDomesticProduct

GFC GlobalFinancialCrisis

HECS HigherEducationContributionScheme

HILDA HouseholdIncomeandLabourDynamicsinAustralia(Survey)

NAC NationalAllianceforCaregiving

NCOSS NewSouthWalesCouncilofSocialService

SPRC SocialPolicyResearchCentre

OECD OrganisationforEconomicCo-operationandDevelopment

UNSW UniversityofNewSouthWalesSydney


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Definition of terms FinancialRelatingtomoneyorhowmoneyismanagedFinancialcapabilityIn Australia, the terms financial capability and financial literacy are used synonymously.However, the term financial capability is used in this report for consistency. Financialcapabilityisdefinedas“acombinationoffinancialknowledge,skills,attitudesandbehavioursnecessary tomakesoundfinancialdecisions,basedonpersonalcircumstances, to improvefinancialwellbeing”[1;6].Financialinclusion/exclusionFinancialexclusionexistswhereindividualslackaccesstoappropriateandaffordablefinancialservices and products – the key services and products are a transaction account, generalinsuranceandamoderateamountofcredit[2].FinancialresilienceFinancialresilienceistheabilitytoaccessanddrawoninternalcapabilitiesandappropriate,acceptableandaccessibleexternalresourcesandsupportsintimesoffinancialadversity[3].Therearefourcategoriesofresources:1.Economicresources:anindividual’s levelofsavings;debtmanagement;theircapacitytomeetcostoflivingexpenses;theirabilitytoraisefundsinanemergency;andtheirlevelofincome.2.Financialproductsandservices:anindividual’saccesstofinancialproductsandservices–abankaccount,creditandinsurance–aswellasdemandfortheseproducts.3.Financialknowledgeandbehaviour:an individual’sknowledgeandunderstandingaboutmoney and financial products and services and their ability and willingness to apply thatknowledge.4.Socialcapital:anindividual’sconnectionto,orisolationfrom,socialnetworks;theirlevelofsocial support in times of crisis; and their need for and access to community and/orgovernmentsupports.FinancialwellbeingFinancialwellbeingiswhenapersonisabletomeetexpensesandhassomemoneyleftover,isincontroloftheirfinancesandfeelsfinanciallysecure,nowandinthefuture.


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EXECUTIVE SUMMARY Moneymatters.Itcandeterminewherewelive,howweliveandwhatwedowithoursparetime,nowandinthefuture.Theabilitytomanagemoneyandcopewithunexpected financial shocks is important for individuals, households and theeconomy.

Around the world, programs are attempting to improve financial capability,inclusion, resilience andwellbeing [2, 4, 5]. These efforts are occurring acrossAustralia, including for example the Financial InclusionAction Plan [6] and theNationalFinancialLiteracyStrategy[1].FinancialLiteracyAustraliaandASICbothaimtoimprovefinancialwellbeing.

But,whatdoesfinancialwellbeingmean?

Definitions of financial wellbeing have begun to emerge internationally [e.g.,ConsumerFinancesProtectionBureau7].However,Australia lacksadefinition.Thisproject,commissionedbyFinancialLiteracyAustralia,fillsthisgap.Itprovidesadefinitionforfinancialwellbeingthataimstoberelevantto,andmeaningfulfor,Australians of different ages and the people who work to improve financialoutcomes.Theprojectasked:

v Whatisfinancialwellbeing,andwhatareitsdifferentparts?

v Whatarethefactorsthatinfluencefinancialwellbeing?

v Wheredoesfinancialcapabilityfitin?

v Howcanwemeasurefinancialwellbeing?

These questions were answered using data from an international literaturereview;focusgroupsandinterviewswith72people;asurveyof821peoplelivinginAustralianaged18andover;andconsultationswithexpertsinthefield(fromfor-profit,not-for-profitandgovernmentsectors).

Findings: What is financial wellbeing?

Financialwellbeing iswhenaperson is able tomeet expensesandhas somemoneyleftover,isincontroloftheirfinancesandfeelsfinanciallysecure,nowandinthefuture.Ithasthreeinterrelateddimensions:

Meetingexpensesand somemoney left over: includeshavinganadequate income tomeet basic needs, pay off debts, and coverunexpectedexpensesandhavingsomemoneyleftover.

Being in control: includes feeling and acting in control of yourfinances.


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Feelingfinanciallysecure:includesnothavingtoworrymuchaboutmoney and having a sense of satisfaction with your financialsituation.

These threedimensionsare interlinked.There isa strong relationshipbetweendimensionsoneandtwo,anddimensionsoneandtwoarestrongpredictorsfordimensionthree.Apersoncanbestrongerorweakerinaparticulararea,buttheoverall result will determine a person’s financial wellbeing. Wellbeing hasobjective (e.g. a person’s savings) and subjective (e.g. howaperson is feeling)components.Finally,timeisalsoimportant.Aperson’sfinancialwellbeingmightbe different today, tomorrow and in the future. Further, current actions andexperiencescanhelpshapeaperson’sfuturefinancialwellbeing.

Eachdimensionhasseveralsub-dimensions(seeTable1).

Table1:Amodeloffinancialwellbeing

Financialwellbeingmeans…

Meetingexpensesandhavingsomemoneyleftover

Beingincontrol Feelingfinanciallysecure

Dimension1 Meetingexpensesandhavesomemoneyleftover

Definition Includeshavinganadequateincometomeetbasicneeds,payoffdebtsandcoverunexpectedexpensesandhavingsomemoneyleftover

Sub-dimensions Abletomeetexpenses

Abletomanagedebt

Savingsbuffer

Abletoafford“littleextras”

Dimension2 Beingincontrol

Definition Includesfeelingandactingincontrolofyourfinancesnowandinthefuture

Sub-dimensions Havingcontroloveryourfinancialsituation

Settingandpursuinggoalsforfuturespendingandlifeplanning

Dimension3 Feelingfinanciallysecure

Definition Includesnothavingtoworrymuchaboutmoneyandhavingasenseofsatisfactionwithyourfinancialsituation

Sub-dimensions Limitedfinancialworry Satisfactionwithfinancialsituation

People’slevelsoffinancialwellbeingandtheresourcestheyneedtodrawontosupporttheirwellbeingmaychangeacrossthelifecourse.Inparticular,people’swellbeingisaffectedduringtransitionalorlifecourseevents,suchasmovingoutof home, having a baby, changes to employment status and income, andretirement. The experience of financial shock can also affect people’s financialwellbeing.


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What factors influence financial wellbeing?

Many factors influence financial wellbeing. These factors can be found at theindividual,household,communityandsocietallevels.Thisresearchfoundthatthestrongest influencers of financial wellbeing were financial capability, financialinclusion,socialcapitalandincome.Health,particularlymentalhealth,wasalsoastronginfluencer.

Financialcapability

Individualswithhigher levelsof financialcapability–acombinationof financialknowledge,attitudes,decisions,andbehaviours–aremorelikelytohavebetterfinancialwellbeing.Butfinancialknowledge,attitudes,decisionsandbehavioursinfluencefinancialwellbeingindifferentways,andtheymeandifferentthingstopeopleofdifferentages.

Financialinclusion

Financialinclusion–havingaccesstoappropriateandaffordablefinancialservicesand products – is important for financialwellbeing. Peoplewho are financiallyexcluded – who lack access to financial products and services – have poorerfinancialwellbeingthanpeoplewhoarefinanciallyincluded.Financialexclusionisapotentialbarriertofinancialwellbeing.

Socialcapital(supportfromfriends,relativesand/orthecommunity)

Friends,relativesand/orcommunityservicescanprovideessentialsupportduringperiodsoffinancialstress.Theymighthelptocoverbasicneedsandexpenses(e.g.income support), to meet unexpected expenses (e.g. emergency financialassistance),andforsome,toaffordlittleextras(e.g.parentshelpingyoungpeopletosave).Peoplewhocannotrelyonfriendsandfamilyduringtimesoffinancialstressreportlowerfinancialwellbeing.

Income

Incomeiscentraltoshapingfinancialwellbeing.Forparticipantsinthisstudy,thevalue of the income (i.e. the amountofmoney coming in), the stability of theincome(i.e.wasitregularandsecure)andthesourceoftheincome(i.e.work,agovernment payment, a superannuation income stream, parents) were eachimportant in contributing to their financial wellbeing. At the household/familylevel,financialwellbeingdecreaseswithhouseholdincome.


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Health

Disability,physicalhealthandmentalhealthwerealso foundtoaffect financialwellbeingdirectlyandindirectly.Peoplewithaprobableseriousmentalillnessaremorelikelytoexperiencepoorfinancialwellbeing,particularlypeopleunder30years, thanpeoplewith lowor no levels of psychological distress. Peoplewithdisabilities had significantly weaker social capital to draw on in a financialemergency,whichisanimportantcontributortofinancialwellbeing.

Otherfactors

People who were interviewed and who took part in focus groups around thecountryalsorevealedarangeofotherfactorsattheindividual,family,communityandwidersociallevels,whichwereimportanttotheirfinancialwellbeing.Theseincluded, employment status, housing, caring responsibilities and governmentpolicy.Forexample,changes topoliciesgoverningsuperannuationhadadirectimpactonthefinancialwellbeingofolderparticipants,andchangestotherateandeligibility requirementsof incomesupportpaymentshadan impacton thefinancialwellbeingofpeoplewithlowincomes(andsomewithmiddleincomes).Thesechangesmadeitdifficultforpeopletomanageexpenses,increasedworryabout money, and decreased people’s sense of control over their financialcircumstances.

Where does financial wellbeing fit with other terms?

Financialwellbeingisdirectlylinkedtofinancialcapability,financialinclusion,andfinancial resilience. This research suggests that financial capability, financialinclusion,socialcapital,andeconomicresources(especially income)areamongthestrongestinfluencersoffinancialwellbeing.Thesefourfactorsalsoformthefour dimensions of financial resilience [3]. This suggests that improvements ineachofthesefourareasarelikelytoenhanceaperson’sfinancialwellbeingbothintimesoffinancialadversity1andinthecontextofeverydaymoneymanagement,wealthaccumulationandpursuitoflong-termgoals.

Financialresilienceistheabilitytoaccessanddrawoninternalcapabilitiesandappropriate,acceptableandaccessibleexternalresourcesandsupportsintimesoffinancialadversity[3]


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The financial wellbeing tree

Financialwellbeing isnot justaboutan individual’s situation. It is important tounderstand that financial wellbeing is also influenced by people’s household,community and social contexts. This is called taking an ecological systemsapproachtounderstandingfinancialwellbeing.

Onewaytothinkaboutfinancialwellbeingandthefactorsthatinfluenceitistoconsider a tree (see Figure 1). The tree’s health (or its financial wellbeing) isaffectedbyfactorswithinandoutsideofitscontrol.Thetree’sfoliagehasthreemainbranches,which represent theprimarydimensionsofwellbeing (meetingexpenses, being in control and feeling financially secure). Each branch has anetworkofsmallerbranchesthatrepresentthesubdimensionsandindicatethehealth of the tree. The tree’s root system draws in important nutrients thatcontributetoitsgrowthduringfavourablecircumstances(thesearetheprimaryinfluencersoffinancialwellbeing).Expectedandunexpectedexternalconditionsor influences will affect the tree (what's happening at a household, family,communityorsocietallevel)andtherewillbeplannedandunplannedeventsthatthe tree needs the resilience to respond to (financial resilience to respond tofinancialshockandlifeevents).Finally,whathappenstodaymattersforthetree,but its future wellbeing can change and actions today and tomorrow can beprotectiveorhinderingfactorsinthetree’sfuture.


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Figure1:Thefinancialwellbeingtree

How can we measure financial wellbeing in an Australian context?

Itwillbeimportanttomeasurefinancialwellbeingintothefuture.Thisresearchhas defined financialwellbeing and has used numerous indicators thatwill behelpful tomeasurewellbeing into the future.However, the financialwellbeingmodel should be further tested before finalising a measurement tool. In the


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meantime, it can be used by policy makers, regulators and organisationsinterested in increasing financialwellbeing to considerwhere theymight focustheir efforts on improving financial wellbeing across the population and forparticulargroups.


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INTRODUCTION

The issue

Accordingtoofficialstatistics,Australia’seconomyisdoingwell.GrossDomesticProduct, wealth and income are growing in real terms [8, 9]. However, noteveryoneisbenefitingequallyfromAustralia’seconomicgrowth.In2013-14,thetop20%ofhouseholdsbyincomeheldover60%oftotalwealth[9,10]andover13% of Australians were living below the poverty line [11]. It is therefore notsurprisingthatalmosttwo-thirdsofAustraliansfacedsomeleveloffinancialstressin2015[3].

Theabilitytomanagepersonalfinancesandcopewithfinancialshockshasalwaysbeen important. And an increasingly complex financial systemmakes financialdecision-making more challenging [12] and increases financial uncertainty formany.Trendssuchasincreasingjobinsecurityanddivorceratesareplacingnewpressuresonfinancialdecisionsanddecisionmakers[e.g.13,14].Thesetrendsmeanthatachieving‘financialwellbeing’isachallenge.

In recent years, a number of definitions for financial wellbeing have emergedinternationally[7].However,Australialacksadefinitionoffinancialwellbeingthatisrelevantandmeaningfultotheir livedexperience.Thispresentsproblemsforassessingprogress inachievingfinancialwellbeingattheindividualandsocietallevel,andfordevelopingappropriateeducationalandpolicyresponses.

The lack of an appropriate framework also hinders the ability of individuals,financialcounsellors,employers,communityorganisations,andpolicymakerstohelp improve financial outcomes and financial wellbeing overall. An ecologicalsystemsapproach[15]suggeststhateachhasaroletoplayinpromotingfinancialwellbeing.

The context

Someresponsesbygovernments,not-for-profitsandcorporateshavefocusedonproviding financial education; providing tools and resources to increaseknowledgeandchangebehaviour(financialcapability);increasingpeople’saccessto financial products and services (financial inclusion); and providing specialistsupport services (such as financial counselling, assistance programs andalternativeformsoffinancialsupport)thataddressspecificneeds.Forinstance,efforts are being made to increase financial wellbeing by improving financialcapability through the National Financial Literacy Strategy [1] and inclusionthroughtheFinancialInclusionActionPlan[6].


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Where does financial wellbeing fit with other terms?

Financialcapabilityisacombinationoffinancialknowledge,attitudes,decisions,andbehaviours,whichinfluenceshowapersonmanagestheirfinancesandthedecisionsandactionstheytake.Financialinclusionishavingaccesstoappropriateandaffordablefinancialservicesandproducts.

Much of the focus of financial capability and financial inclusion has been onindividualcapacities.Althoughitisrecognisedthatbroaderstructuralconditionscanalsoinfluencefinancialwellbeing,thisreceiveslessattention..

Recently, financial resilience – defined as “an individual’s ability to access anddrawoninternalcapabilitiesandappropriate,acceptableandaccessibleexternalresourcesandsupportsintimesoffinancialadversity”[3;5]–wasdevelopedasaconceptandmeasuredacrossAustraliatoprovideadeeperunderstandingofaperson’soverallfinancialsituationandwheretheysitonascalebetweenseverefinancialstressandfinancialsecurity.

This project explores the relationship between these concepts and financialwellbeing.Theprojectbuildsonexistingresearchandterminologyandrecognisesthat the factors influencing financial wellbeing lie beyond the individual. Thisapproachwillrevealthewayinwhichimprovinganindividual’sfinancialwellbeingrequiresactionatmultiplelevels.

This project

Whilemuchresearchhasbeendoneinanattempttodefinefinancialwellbeingand itsmeasures, financial wellbeing is a complex concept, defined in variousways,withlittleconsensusonwhatitmeanstoeverydayAustralians.

Thisproject,commissionedbyFinancialLiteracyAustralia,aimstoprogresstheunderstandingoffinancialwellbeinginAustraliaby:definingandconceptualisingthe term in the Australian context; understanding its components and therelationships between them; and beginning to understand how it might bemeasured.Theprojectisdrivenbythreekeyresearchquestions:

1. Whatisfinancialwellbeing?Howisfinancialwellbeingdefined?Whatareitskeycomponents/domains?HowdoestheconceptoffinancialwellbeingdifferforAustraliansofdifferentages,stagesandsocialcontexts?

2. What influences financial wellbeing? What are the influencers thatfacilitate or impede changes in financial wellbeing? How does financialcapabilitycontributetofinancialwellbeing?HowdoinfluencersdifferfordifferentgroupsacrosstheAustralianpopulation?


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3. Howcanwemeasurefinancialwellbeinganditskeycomponents?Whatindicator(s)canbeusedtomeasurefinancialwellbeingandchangesovertime?

Theprojectaimstodevelopandtestanewmodeloffinancialwellbeingandits influencers. It addresses gaps in existing knowledge by: critiquing theexisting literature2; drawing on interviews and focus groups with young,workingageandpeopleofretirementageacrossAustralia;consultingwithkeystakeholdersinfinancialservices,financialcapabilityandfinancialinclusion;anddevelopingandtestingadraftmodeloffinancialwellbeingusinganationalsurveyofAustralianpeople.

2SeeAppendixBforasummaryofrecentresearchintothemeasurementoffinancialwellbeing


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RESEARCH METHODS Thisreportdrawsondatafromthreeconnectedresearchphases(seeAppendixAfordetails):

1. A scoping review of existing national and international research onfinancialwellbeing,whichincludedover80papers.

2. Qualitativefocusgroupsandinterviewswithatotalof72peoplelivinginAustraliathrough:

• 9focusgroupswith54peoplelivinginAustraliaofdifferentages,gendersandsocio-economicstatuses

• 18one-on-oneinterviewswithpeoplefromalowincome;peoplewithculturallyandlinguisticallydiversebackgrounds;soleparents;peoplewithadisability;peoplecaringforafamilymemberwithadisabilityorillness;youngunemployedpeople;andpeoplelivinginregionalandruralareas.

Qualitativedatawas transcribedand codedand thematic analysiswasused toexaminethefindings3.

3. A quantitative survey of a representative sample of the Australianpopulation,with 821 respondents, conducted by RoyMorgan ResearchandweightedtoberepresentativeoftheAustralianpopulation.

Thesurveywasundertakentotestthepreliminarymodeldevelopedthroughthescoping review and qualitative work. Survey questions were mapped to eachdimensionandsub-dimensioninthepreliminarymodeloffinancialwellbeing(seeAppendixC)anddrewfromexistingquestionnaires,including:

• theHousehold IncomeandLabourDynamics inAustralia (HILDA)survey

• arecentNorwegianSurveyoffinancialwellbeing[16]

• theFinancialResiliencesurvey[3]

• theAustralianBureauofStatisticsCensus2006,2011

• thePovertyandExclusioninModernAustralia(PEMA)survey[17].

33Notethatforthepurposesoftheresearch,thefollowingagecategorisationswereused:18-25:‘youngperson’,26-64:‘workingage’,65+:‘retirementage’.Howeveritisacknowledgedthatthereareparticipantsunder25andover65whoareworkingforpayandthosebetween26and64whoarenotworkingforpay.


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Factor analysis and regression analysis techniques were used to test thepreliminaryconceptualmodelof financialwellbeingandto identify factorsthatinfluence financial wellbeing (See Appendix D for details). The data was alsoanalysedtoseeifandhowlifeevents(e.g.divorce, losingone’sjob) influencedfinancialwellbeing.DescriptivestatisticscanbefoundinAppendixE.

Eachphasebuiltonthepreviousphasetodeveloptheconceptualframeworkoffinancialwellbeingandthekeyfactorsthatinfluenceit.

In addition, 11 expert stakeholders (including financial advisors, educators,counsellorsandconsumerrepresentatives)wereconsultedtoinformandrefinethepreliminaryconceptualframeworkandthefinaldraftframework.Finally,theproject was guided by a steering group. The steering group met four timesthroughouttheprojectandprovidedexpertguidanceinthedevelopmentoftheframeworkforfinancialwellbeinganditspracticalimplications.


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WHAT IS FINANCIAL WELLBEING? Financialwellbeingincludessubjectiveandobjectiveelements[Seeforexample,18,19,20].Objectiveelementsincludepeople’sfinancialcircumstances,suchasincome,debtandsavings,andcanbeexternallyverified[21].Subjectivemeasurescapture people’s perceptions or feelings about a situation or variable, such assatisfactionwith income, financial situation and standards of living [19]. Somemeasuresofwellbeingmaycombineobjectiveandsubjectiveideas.Forexample,having “enoughmoney to pay for essentials with some left for non-essentials(luxuries)” [20;1108] could be measured through subjective perceptions orobjectively by measuring income versus expenditure. Using objective andsubjective measures helps to capture a more complete picture of people’sexperiences.

People’slevelsoffinancialwellbeingandtheresourcestheyneedtodrawupontosupporttheirwellbeingmaychangeacrossthelifecourse.Inparticular,people’swellbeingismostaffectedduringtransitionalorlifecourseevents,suchasmovingout of home, getting married, getting divorced, having a baby, changes toemploymentstatusandincome,andretirement.Therefore,theconceptualisationoffinancialwellbeingshouldalsobeunderstoodwithinalifecourseframework.

An Australian definition of financial wellbeing

Financialwellbeinghasthreeinterrelatedparts,ordimensions:

1. Meetingexpensesandsomemoneyleftover:includeshavinganadequateincometomeetbasicneeds,payoffdebts,andcoverunexpectedexpensesandhavingsomemoneyleftover.

2. Beingincontrol:includesfeelingandactingincontrolofyourfinances.3. Feelingfinanciallysecure:includesnothavingtoworrymuchaboutmoney

andhavingasenseofsatisfactionwithyourfinancialsituation.

Financialwellbeingiswhenapersonisabletomeetexpensesandhassomemoneyleftover,isincontroloftheirfinancesandfeelsfinanciallysecure,nowandinthefuture.


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ThesedimensionsaresetoutinTable2.

Table2:Thethreedimensionsoffinancialwellbeing.


Meetingexpensesandsomemoneyleftover Beingincontrol Feelingfinanciallysecure

Eachofthesethreeinterrelateddimensionsoffinancialwellbeinghasanumberof sub-dimensions. These sub-dimensions are described further below and therespectivesurveyitemsaredescribedinAppendixC.

Dimension 1: Meeting expenses and some money left over

Thefirstdimensionoffinancialwellbeing ismeetingexpensesandsomemoneyleftover.Drawingontheliteratureandqualitativework,wehaveidentifiedfoursub-dimensions:

• Theabilitytomeetexpenses• Havingmanageabledebtlevels/beingabletomeetdebt• Havingasavingsbuffer• Beingabletoafford‘littleextras’.

This dimension involves being in a financial position to be able tomeet basicexpenses and have somemoney left over tomake choices in both short-termspending and broader life decisions and planning. Most existingconceptualisations of financial wellbeing include a dimension or severaldimensionsthatcaptureaperson’sfinancialcircumstances, inotherwords,theextenttowhichtheirmaterialresourcesenablethemto‘getby’and‘getahead’.This work draws on a combination of objective measures of financialcircumstances, such as savings or debt-to-payment ratios and subjectivemeasures,suchaswhetherapersonthinkstheycanraisefundsinanemergency,orwhetherapersonhasenoughleftoverfornon-essentials[7,18,22].

ResearchwithAustraliansofdifferentagesandcharacteristicsstronglysupportedtheexistingliterature.Theparticipantsinourstudydescribedhavingsufficienttobeabletocoverexpenses(includingtopayoffdebt)andtohaveabitleftover.Byhavingabitleftover,theymeantseveralthings:havingabityoucanputasideasabufferinthecaseofanunexpectedexpense,havingabityoucanputasideandsave for the future, and having a bit you can use to buy small (and modest)luxuries.


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Havingenoughmoney topay thebillswhen they come inandyou’recomfortable,alittlebitleftoverifyoucanforthatemergencythatyoudon’tknowabout(female,retirementage4).

Itmeansthatallofmybillsarepaidandthere’snolingeringdebtandIcanaffordaholiday(female,workingage).

Havingabitleftovermeanshavingchoices.AccordingtotheConsumerFinancialProtectionBureau,financialwellbeingincludesthecapacitytomakechoicesaboutspending that ‘allow you to enjoy life’ in the present and future [7]. Financialchoiceisanimportantcomponentoffinancialwellbeing[7,19,20].InterviewsandfocusgroupswithAustraliansofdifferentagesprovidedinsightintowhatfinancialchoicemeansinpeople’severydaylives.Theparticipantsdescribedthefinancialchoicesapersoncananddoesmaketolivelifeinthewaytheywouldlike.

…you’vegotalltheincomeorfundsthatyouneedtolivelifewhetherit’spaying bills or whatever it is and have money so that if there’s acontingencyorsituationthatcomesupyoucanhandleit.ThenIguessatthesametimehavedisposableincomesothatyoucanhavefunandlivelifethewayyouwantto(Male,youngperson).

Thisdimensionisaboutbeinginafinancialpositiontomakechoicesineverydayspendingandtolivebeyondtheeverydaybymakingchoicesregardinglongertermplanningandlifegoals.

Table3:Dimension1anditssub-dimensions

Dimension1 Meetingexpensesandsomemoneyleftover

Definition Includeshavinganadequateincometomeetbasicneeds,payoffdebts,andcoverunexpectedexpensesandhavingsomemoneyleftover

Sub-dimensions

Abletomeetexpenses

Abletomanagedebt

Savingsbuffer Abletoafford“littleextras”

Therewasastrongsensethathavingchoicesalonewasnotanadequatebasisforfinancial wellbeing. Focus group and interview participants also talked aboutmakinginformedchoices–‘choosingwisely’orbeingincontrol.

4Notethatforthepurposesoftheresearch,thefollowingagecategorisationswereused:18-25:‘youngperson’,26-64:‘workingage’,65+:‘retirementage’.Howeveritisacknowledgedthatthereareparticipantsunder25andover65whoareworkingforpayandthosebetween26and64whoarenotworkingforpay.


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Dimension 2: Being in control

The second dimension of financial wellbeing is being in control. This includesfeelingincontroloveryourfinancialcircumstancesandactingincontrol,ortakingcontrol,ofyourfinancialcircumstances.Drawingontheliteratureandqualitativework,wehaveidentifiedtwosub-dimensionsofbeingincontrol:

• Havingcontroloveryourfinancialsituation• Settingandpursuinggoalsforfuturespendingandlifeplanning.

Accordingtotheliterature,financialwellbeingisrelatedtowhetherpeoplehave,or feel they have, financial autonomy, or are able to exert control over theirfinances and financial actions [19, 20, 23]. Vlaev and Elliot [20] suggest thatperceivedcontroloverone’sfinancialsituationisastrongerpredictoroffinancialwellbeing than income, debt-to-income ratio, attitudes towards finances orexternalpressuresthataffectborrowing.

Interviewsandfocusgroupsprovidedamoredetailedunderstandingofwhyandhowcontrolisanimportantpartoffinancialwellbeing.Twothemesemergedwithrespecttotheimportanceofcontrolinthepresentandthefuture.Thefirstwashavingcontroloveryourcurrentfinancialsituation,whichmeanshavingasayinfinancialdecisionsthataffectyou,havingaccesstoyourmoneyandcontroloverhowit isspent,orgenerallyhavingfinancial independence.Havingcontrolalsoincludedkeepingtrackofyourfinances,andbeingresponsibleinyourspending(including exercising self-control and being discerning in your spendingbehaviours).

Justbeingincontrol.Beingincontrol,notbeingthatleafinthebreezethat’s just blowing around everywhere and landing where you land(female,workingage).

...I’mincontrol,thatwearenotgettingbig$300,$500and$600bills,“Paynoworthedebtcollectorswillcome.”I’mreallyproudofmyself,thatallofmybillsarepaidandI’minfront…(female,workingage).

Thesecondthemewasfuture-oriented,andfocusedontheimportanceofcontroloveryourfinancesgoingforward,especiallysettingandpursuinggoalsforfuturespendingand lifeplanning.Oneparticipantdescribed thisas ‘helpingherolderself’.

Control.Youneedyourself-control.You’vegottobedisciplinedtosay,“I’m going to save thismuchmoney, put it away for thismonth andplan.”It’saboutplanning,planningyourfinancesforyourfutureneedsandwants(male,workingage).


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Accordingtotheresearchparticipants, it isnotpossibletounderstandfinancialwellbeing unless the importance ofbeing in control is taken into account. Forexample,anindividualmayhavelotsofmoneyandbehappywiththeamountofmoney they have, but many participants believed that this person is not‘financiallywell’unlesstheyarealsoincontroloftheirfinancialsituation;thatis,theyhaveaccesstoandautonomyovertheirfinances,understandandkeeptrackoftheirfinances,arecontrolledintheirspendingbehaviour,andareplanningforthefuture.




Sub-dimensions Havingcontroloveryourfinancialsituation

Settingandpursuinggoalsforfuturespendingandlifeplanning

Dimension 3: Feeling financially secure

Feeling financially secure refers to thewayaperson feels about their financialsituation.Drawingontheliteraturereviewandfocusgroupsandinterviews,weidentifiedtwosub-dimensionsoffeeling financiallysecure:

• Experiencinglimitedfinancialworry• Havingasenseofsatisfactionwithyourfinancialsituation.

A number of existing conceptualisations of financial wellbeing combineindividuals’ objective financial circumstances with how they feel about theirfinancialcircumstances.Somedefinitionsidentifyacombinationofanobjectiveand a subjective assessment of a person’s financial position [24], or thecombination of ‘being and feeling’ [25]. Others focus more specifically on aparticularfeelingorstateofmind,thatis,satisfactionwithfinancialcircumstancesorfinancialworryorstress[18,23,26,27,28].Researchsuggeststhataperson’ssubjectiveassessmentof their financial situationcanbebasedon theircurrentfinancialpositionbutcanalsobeshapedbyaseriesofreferencepoints.Thesereferencepointsincludepeople’sfinancialexperiences,challengesandprogressinthepast,theirexpectationsandgoalsforthefuture,andthecircumstancesoftheirfamiliesandpeers[18,23].

Thefocusgroupsandinterviewsinthisstudyprovidedeeperinsightintojusthowimportantaperson’sfeelingsabouttheirfinancialsituationsaretotheiroverallfinancial wellbeing. While people frequently used ‘worry’ and ‘satisfaction’ to


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describehowtheyfeltabouttheirfinancialsituations,worry–ornothavingtoworry–wasbyfarthemostcommon.Inallofthefocusgroupsandmostoftheinterviews,whenparticipantswereaskedwhatisimportanttofinancialwellbeing,theysaid‘nothavingtoworry’.

Ithinkthebottomlineisyoudon’thavetoworryaboutputtingfoodonthetable(male,Workingage).

I'dloveto…nothavetoworryaboutlookingafterthenextbitandthenthenextbitandthenit'sjustadominoeffect.Forinstance,Ifinallygetmycreditcardpaidoff,whathappens?Someonebacksintomycar,sonowI'vegottopayfortheinsurancetofixthat(female,youngperson).

Fortheparticipants,financialwellbeingmeantnothavingtoworryaboutarangeoffactorsassociatedwiththeirfinancialsituation.Itmeantnothavingtoworryaboutpayingbillsorbuyingfood,nothavingtoworryaboutwhethertheycouldafford toparticipate inasocialactivitywith friends,nothaving toworryaboutwherethenextpaychequeiscomingfrom,nothavingtoworryabouttheabilitytopayoff debts, being able tobuy somethingnice thingsoccasionallywithoutworrying,nothaving toworryabouthavingenough tomeet futurehealthandaged care needs. Financial worry (some used the term ‘stress’ instead), wasexperiencedinboththeshortandlongterm,andwasassociatedwithnotbeingabletomeetneedsinboththepresentandthefuture.

OneofthethingsthatIwantformyolderageistheabilitytonothavetoworryandIthinkthat’sit,nottohavetoworryifI’mgoingtohaveenough money to pay the gas bill or the electricity bill (female,retirementage).

Nothavingtoworrywasanessentialcomponentoffinancialwellbeingacrossallincomegroups.Forindividualsinthelow-incomegroups,nothavingtoworrywassomethingtheyhopedforandaspiredto.Forthoseinhighincomegroups,nothavingtoworrywassomethingtheyfeltluckyandgratefulfor.

Theconceptofsatisfactionwasalsoimportant.Forparticipants,satisfactionwasasenseofoverallfinancialwellbeing.Whereas‘happiness’withfinanceswasoftenmomentaryorshort-term,satisfactionwasdescribedasalongertermfeeling.Aperson’sshort-termfeelingsabouttheir financialsituationwereoftendifferentfrom their longer term feelings. We have grouped these feelings under theheadingof‘feelingfinanciallysecure’.Itisimportanttonotethatacomprehensive


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conceptualisation of financial wellbeing must capture feelings about both thepresentandthefuture5.





How do the dimensions of financial wellbeing fit together?

Statistical analysis showed that the three proposed dimensions were stronglyrelated rather than independent6. This suggests that to fully understand theconceptoffinancialwellbeing,thesedimensionscanbeexploredbothindividuallyandholistically.

It isalsohelpfultounderstandhowthedimensionsmayrelatetooneanother.According to the quantitative analysis, there is a strong relationship betweendimensions1and2:meetingexpensesandbeingincontrol(SeeAppendixFforatableofcorrelations).Atthesametime,dimensions1and2arestrongpredictorsfordimension3: feeling financially secure. That is, bothmeetingexpenses andbeing in control contributed independently to financial security7. Meetingexpensesplaysastrongerroleincontributingtofeelingsoffinancialsecuritythanbeingincontrol.Apersoncanbestrongerorweakerinaparticulararea,buttheoverallresultwilldetermineaperson’sfinancialwellbeing.

WHAT ARE THE INFLUENCERS OF FINANCIAL WELLBEING? Financial wellbeing is influenced by a number of factors. Family, peers,communities, institutions and society all play a role, alongside individual

5Theitemsusedbytheresearchteamtomeasureeachofthesub-dimensionsaredetailedintheAppendixC.

6Bivariate correlationsbetween the threedimensionswereallover, r =0.50.Also, factoranalysisof the survey itemsproducedasinglefactorratherthanthreediscretefactorscorrespondingtoeachdimension.However,thesinglefactorexplainedlessthan50%ofthevarianceinthefinancialwellbeingsurveyitems,suggestingthatmuchinformationislostfromcombiningthevariablestogether.Therefore,whenexaminingtheinfluencersoffinancialwellbeing,weconsideredthethreedimensionsandfinancialwellbeingoverall.Theoverallscorewasthemeanofthethreedimensionscores.

7 ‘Feelingsof financialsecurity’wasregressedon ‘meetingexpenses’and ‘being incontrol’:AdjustedR2=0.58,Havingenough:ß=0.6,p<0.001;Beingincontrol:ß=0.3,p<0.001.


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influencers.Bytakingabroadsystemsview,wecanbegintounderstandtherangeofdifferentenablersandbarriers,aswellastherolesthatdifferentcontextsplay,ininfluencingfinancialwellbeing.

Our ecological approach

Wetakeanecologicalsystemsapproach[15,29].Thishelpstounderstandingnotjustwhatishappeningatanindividuallevel,butalsoinhouseholds,communitiesandacrosssocietyandhowthesefactorsaffectfinancialwellbeing[7,15,29,30].

Asystemsapproachalsoconsidersfeedbackloops–howdifferentfactorsinteractandtheoutcomes–whenonepartofthesystemchanges[30].Thisisimportantforfinancialwellbeingbecauseindividual,familyandcommunityinfluenceshavebeenfoundtoaffectfinancialcapability,financialinclusionandfinancialresilience[3,19].Whilesomefinancialshocksmightbeuniquetoanindividual,otherscanbemuchmorewidespread,suchasthe2008—09GlobalFinancialCrisis.

Thissectiondrawsontheliteratureandourresearchtoexaminetheinfluencesoffinancialwellbeingaccordingtothedifferentlayersoftheecologicalmodel:

a) Individualinfluences(e.g.financialcapability,demographics,health)b) Household,familyandpeer-levelinfluences(e.g.householdincome)c) Communitylevel(e.g.communitysocio-economicstatus)d) Societallevel(e.g.policies)


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AsummaryofthefindingsispresentedinTable6andaredescribedingreaterdetailbelow.

Table6:Summaryoffindingsfromtheresearch

Whichfactorsconsistentlyemergedaspotentialinfluencersoffinancialwellbeingacrosstheresearchphases?

Whatfactorsrequirefurtherandmoredetailedanalysis?

Financialself-efficacy8

Financialbehaviours,particularlyregularsavingsandpayingoffmorethanminimumcreditormortgagepayments

Apositiveattitudetowardsmoney

Financialinclusion(accesstofinancialproductsandservices)

Socialcapital

Householdincome

Health(especiallymentalhealth)

Ageandlifecourseevents,andhowtheyintersecttoinfluencefinancialwellbeing

Gender,butparticularlydifferenceswithindifferentgroupsofmenanddifferentgroupsofwomen.

Educationandemployment,andthepathwaysthatlinkthemtofinancialwellbeing(e.g.wealthgeneration).

Coupledynamicsandtheroleoffinancialcontrolinthehousehold

Theinfluenceofcaregiverburdenonfinancialwellbeing

Theroleofcommunity-andsocietal-levelfactors

Individual influencers

Therearemanypotentialindividualinfluencesoffinancialwellbeing.Basedontheliterature and the results of the qualitative data, we explored a number ofindividual influencersof financialwellbeing indepth, including financial factors(financialcapabilityandfinancialinclusion);demographicfactors(age,lifecourse,gender,employment);andhealthanddisability/chronicillness.Findingsfromthesurveyareintegratedintoeachsection.

8Financialself-efficacyreferstopeople’sself-ratedabilitytomanagetheirfinances.Thisrepresentstheirself-ratedabilitytomanagetheirday-to-dayspending,balancesavingswithspendingandtohavemoneysetasideifneeded.


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Financial capability

Financial capability is a widely acknowledged influence on financial wellbeing.Financialcapabilitycontainsthecomponentsoffinancialknowledge,attitudesandmotivations,andbehaviours(exploredbelow).Theexistingliteratureandourownresearch suggests that the relationshipsbetween these components arehighlycomplex.

Financial knowledge

Financial knowledge influences financial wellbeing largely because of itsrelationshipwithfinancialbehaviour[7,19,31].However,itisimportanttonotethat having financial knowledge does not necessarily translate to changed orimprovedfinancialbehaviours[32].

Accordingtotheparticipants,havingfinancialknowledgemeantunderstandingarange of financial terms, concepts, products and practices. This financialknowledge was said to be accumulated over time, mostly through informalchannels,suchasguidancefromfamily(especiallyparents)andemployers,andthrough professional training, personal life experience and/or independentresearchonline.

I feel likeas Igetolder Iprobablyshouldgetmyheadaround itabitmore.MyparentstaughtustosaveandthingsbutyesIguessmorethefinerdetailsoffinance(female,youngperson).

A number of participants had also sought professional financial advice. Somepeoplereportedthatthisimprovedtheirfinancialknowledgeandskillsandasaresult supported them to improve their financial decisions andbehaviours andthereforetheiroverallfinancialwellbeing.Otherssoughtfinancialadvicenottoimprovetheirknowledge,butrathertosupporttheirfinancialdecision-making.

Ihaveafinancialplanner,andmywifehasone.I’vehadonefromwhenIwasabout18or19.Youcan’tknoweverythingsobothofushavelifeinsurance,superannuation,thingslikethat,whereweinvestonwhatourfinancialadvisoradviseson(male,workingage).

According to theparticipants, it is the combinationof financial knowledgeandadvice, and certain personal traits and attitudes (such as being responsible ordetermined)thatcanreallychangefinancialdecisionsandbehaviours.Financialknowledgeandadvicewasmostusefulwhencombinedwiththerightattitudesorwillingnesstoengagewithandapplyit.


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Financial attitudes and motivation

Attitudestowardsmoneyandfinancescaninfluencefinancialwellbeing.VlaevandElliot[20]foundthatthemorepositiveanindividual’sattitudetowardsmoney,themorelikelytheyaretoexperiencehighfinancialwellbeing.Shimetal.[19]alsopropose a relationship between financial attitudes and financial wellbeing.Although indirect,Shimetal.’sadaptationofthetheoryof ‘plannedbehaviour’suggests that financial attitudesmay influence financialbehavioural intentions,alongwithperceptionsofcontrol,subjectivenorms(parentalexpectationsinthisinstance),andfinancialknowledge.Similarly,theConsumerFinancialProtectionBureau[7]foundattitudestowardsaspecificfinancialbehaviourwereamediatingfactorbetweenfinancialknowledgeandcarryingoutthatbehaviour.Particularly,they found that: ‘feel[ing] confident in knowing how to do it effectively’ and‘believ[ing]thatdoingitisvaluable’,alongwithindicatorsofknowledgeandskills,opportunityandthedecision-makingcontext,werefactorsinfluencingbehaviourandrelatedly,financialwellbeing[7;46].

Manyofthesefindingswereechoedinourparticipants’understandingsofwhatittakes to make sound financial decisions. They are also consistent with therelationships between financial capability and financial wellbeing found in thesurvey data. However, our findings question the value of specific day-to-dayfinancialbehavioursasalonemechanism(e.g.usingbudgetingapps)forfinancialwellbeing.

Financial behaviours

Financialbehavioursidentifiedintheliteratureasinfluencingfinancialwellbeingcangenerallybegroupedintofourcategories[7,13,33,34,35]:

1. Saving: active savings behaviour such as ‘started or increased mysavings’[34]andmorepassiveactionslike‘beingfrugal’or‘investing’[7].

2. Planning and budgeting: this has both a present and a futurecomponent.Present-relatedbehavioursincludefollowingabudgetor‘livinganintentionallifestyle’[7]whilefuture-relatedactionsincludehavingafinancialplanforthefutureandhavingfinancialgoals[7,34].Seeking knowledge and becoming more informed can also beconsideredaninvestmentintothefuture[7].

3. Credit: this encapsulates actions related to decreasing or effectivelymanagingdebt[7,33,34].

4. Buying behaviours: captures actions related to actively managingspending,includingcuttinglivingexpenses[34],beingcautiouswhenspendingmoney[13],andavoidingcompulsivebuying[33].


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Recent researchhasalsodemonstrated the importanceof financialmasteryorfinancialself-efficacyforpredictinghighersavings,lowerdebt[36]andadjustmenttoretirement[37].

Thesurveyfoundthat,afteradjustingforallotherinfluencers,peoplewithhigherlevelsof financial self-efficacy9weremore likely to feel financially secure,haveenough money to meet expenses and be in control over their finances (seeAppendixGforregressionresults).

Greaterfinancialknowledgeandpositivefinancialattitudeswerealsoassociatedwithfinancialwellbeing,buttoalesserdegree.However,thisislikelytobepartlyexplained by positive relationship of financial knowledge and attitudes withfinancialbehaviours (seeAppendixF forcorrelations).This finding is consistentwithexistingresearchwhichsuggeststhatfinancialknowledgeandattitudeswhenappliedviapositivefinancialbehaviours,producesfinancialwellbeing[7,16,19,31]. Interview and focus group participants reinforced this: people felt theyneededtherightknowledge,attitudeandadvicetomakesoundfinancialdecisions(behaviours).

What financial behaviours are most influential for financial wellbeing?

Thesurveyaskedanumberofquestionstounderstandwhichfinancialbehavioursinfluencefinancialwellbeing.Thesecanbesplitinto:

1. Day-to-daymoneymanagementbehaviours(e.g.keepingtrackofmoneyinhead,checkingbankstatements,usingbudgetingapps)

2. Futurefinancialplanningbehaviours(e.g.regularsavingscontributions,payingoffmorethanminimumamountsoncreditcardsandmortgages,additionalcontributionstosuperannuation)

3. Financialself-efficacyquestions(e.g.theextentpeoplefeeltheybalancetheirspendingandsavings,areorganisedwithmoneyandhavemoneyasideforlater).

These threegroupsofbehaviours showeddifferent relationshipswith financialwellbeing. In general, financial self-efficacywasmore associatedwith financialwellbeing thanday-to-daymoneymanagementbehavioursand future financialplanning behaviours. Therewere also differences between the day-to-day andfuture planning behaviours. As shown in Table 7, specific behaviours, such assaving regularly, checking credit card statements and paying off more thanminimum credit card/loan repayments, are the behaviours most stronglyassociated with financial wellbeing. However, the survey findings suggest any

9Inthisresearch,financialself-efficacyreferstoself-ratedabilitytobalancesavingsandspendingandtobeorganisedwithmoney.


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impacttheymayhaveonfinancialwellbeingwouldbemodest.Weakerinfluencesincludepayingoffmorethanminimummortgagepaymentsandmakingvoluntarycontributionstosuperannuation.

The survey findings also indicate that behaviours such as the use of onlinebudgeting applications and keeping track of spending had no statisticallysignificantinfluenceonoverallfinancialwellbeing.

Self-perceptions of general financial behaviours were strongly associated withfinancial wellbeing10. We also found that financial wellbeing increases as thenumberoflong-termbehavioursaccumulate.

10r=.6,p<.001.Thisrepresentsastrongrelationship


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Table7:Financialbehavioursandtheirrelationshipswithfinancialwellbeing

Day-to-daymoneymanagementbehaviours

%undertakingbehaviour

Relationshipwithfinancialwellbeing

Futureplanningbehaviours

%undertakingbehaviour

Relationshipwithfinancialwellbeing

Icheckedmycreditcardstatementsforunusual/suspiciousentries3

61% Weak–moderate

Savedregularly 57% Moderate–strong

Icheckedmybankstatementsforunusual/suspiciousentries

71% Weak Paidmorethantheminimumrepaymentrequiredbycreditcardcompanyorloanprovider11

71% Weak–moderate

Ikeptreceipts 47% Veryweak Paidmorethantheminimumhomeloanrepayment12

44% Weak

Iusedahouseholdbudget/spreadsheet

27% Veryweak Madevoluntarycontributionstowardsmysuperannuation13

28% Weak

Ikepttrackofmymoneybywritingdownnotes

21% Norelationship

Followedabudget 43% Veryweak

Ikepttrackofmymoneyinmyhead

40% Norelationship

Iusedanonlinebudgetingtoolorapp

4% Norelationship

Iusedanapptokeeptrackofmyspending

7% Norelationship

Ilookedatsomeorallofmybank/creditcardstatementsbutnotinanydetail

20% Norelationship

Noneofthesebehaviours 4% Veryweak(negative)

Noneofthesebehaviours 9% Veryweak(negative)

Sumofbehaviours 0:3.7%1:17.1%2:19.2%3:24.2%4:19.5%5:10.7%6:4.6%7:0.9%8:0.1%9:0.1%

Veryweak Sumofbehaviours 0:9.4%1:24.8%2:30.9%3:21.0%4:11.0%5:2.9%

Moderate

Insummary,overallperceptionsofmoneymanagement,savingsbehaviourand,toalesserextentthemonitoringofbank/creditcardstatementsandpayingoffmore than minimum credit card payments, warrant future investigation aspotentialinfluencersoffinancialwellbeing.Furtherresearchisneededtoensurethatthefindingsarenotaffectedbythesubjectivemeasuresusedtodeterminefinancialwellbeingamongtheparticipantssurveyed.

11Forthosewhoaccesscredit(n=425)12Analysisrestrictedtothe412participantswhohaveamortgage.Notethatforthosewithmorethan50%owingontheirmortgage,therelationshipbetweenpayingoffmorethantheminimum(60%)andfinancialwellbeingisstrongerforthisgroup(r=0.25,p<0.001)thanforeveryonewithamortgage(r=0.16,p=0.001).

13Forthoseinthepaidworkforce


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Financial inclusion

The literature and our quantitative research indicate that financial inclusion –‘accesstoappropriateandaffordablefinancialservicesandproducts’,includingabank account, insurance and line of credit [2;6] - is an influencer of financialwellbeing.14

Financial inclusioncanenable individuals tocopewith financialshocks,smoothconsumption and asset build [4, 38]. The development of inclusive financialsystemscanparticularlybenefitvulnerablegroups[39;279,40].

Thesurveyshowedthatpeoplewhoreportlowerlevelsoffinancialinclusionhadpoorerfinancialwellbeingoverallandacrosseachofthethreedimensions15.

Thefocusgroupsand interviewsreinforcedthe importanceof ‘appropriateandaffordable’credit.Generally,participantsspokeintermsofgoodandbaddebt.Forexample,ahomeloancouldbeapositiveoverallcontributiontoaperson’sfinancial wellbeing in cases where they could meet the repayments withoutfinancialstress.Incomparison,asmallcreditfringe(orpayday)loancouldbeverybad for financialwellbeingbecauseof thehigh repayment costs.Manypeopledescribedanambiguousrelationshipbetweenaccesstocreditanditsimpactontheirfinancialwellbeing:sometalkedaboutwantingto‘cut[their]creditcardup’(male,youngperson),butnotbeingabletoastheyfeltitservedasasecuritynet.

Demographic factors

Personal demographic characteristics and traits have been identified asinfluencing financial wellbeing in other studies. For example, the ConsumerFinancial Protection Bureau [7] examined internal characteristics – having aninternal frame of reference, perseverance, executive functioning and efficacy.Kim,Garman[34]consideredtheeffectofageandincome.PorterandGarman[23]includedgender,ethnicity,educationalattainment,employmentstatus,andanindexofgeneralwellbeingintheirmodeloffinancialwellbeing,withgeneralwellbeingandfull-timeemploymentemergingassignificantpredictorsoffinancialwellbeing.Shim,Xiao[19]examinedtherelationshipbetweensocio-demographiccharacteristics(suchasgender,race/ethnicity,parent'sincome,student'sincome,class standing, living situation and age) and personal values on financialknowledge,attitudesandbehaviour.

14Thishasbeenincludedasan‘individualinfluencer’,however,itisimportanttonotethattheprovisionofappropriate,affordable and accessible financial products and services relies on the financial services sector, not-for-profits andgovernments.15SeeAppendixFforcorrelations.


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Ourresearchfoundanumberofindividualdemographicfactorsthatinfluenceaperson’soverallfinancialwellbeing.Theseincludeindividualdemographics,suchas age and gender; personal traits and skills; and circumstances, such asemploymentandhealthandwellbeing.

Age, life stages and life events

Although not a common feature in existing literature, some research hasrecognisedthatfinancialwellbeingmaydifferaccordingtoages,stages,lifeeventsand their interaction [41]. Our research found age, life stages and life eventsinteracttoinfluencefinancialwellbeing.Thiswasastrongfindingfromthefocusgroupsandinterviews.However,thesurveywasunabletopickupthenuancesofagebecauseofthesamplesizeandthenumberofpeoplesurveyedwhoreportedexperiencingsignificantlifeeventsinthelastyear16.

Ages and stages: Age and life course stages were frequently discussed asinfluencers of financial wellbeing by focus group and interview participants.People described the ways in which age shaped their financial situation andfinancial choices, their feelingsabout their financial situation, and controlovertheirfinances.Agealsoshapedwhatpeoplevaluedwhenitcametoeachofthethreedimensionsoffinancialwellbeing.

Thesurveydatasuggeststhatfinancialwellbeingincreasesmarginallywithage17.Youngpeopledescribedincreasesintheirexpensesastheybecameindependentfrom their parents.Working age participants experienced gradual increase inincome,thoughthiswasinterruptedbyarangeoffactorssuchasredundancies,health issues, relationship breakdown and, particularly for women, caringresponsibilities.Pensionageparticipantsdescribedhowretirementcausedthemtoadjusttheirstandardof livingandattempttoreducetheirexpenses insomeways because they were no longer participants in the labour market. This isconsistentwith the literature. Schieman’s [42] study [seealso43] showed thatolder participants were more financially satisfied than younger participants,despitetheirlowerincome.

16Futureresearchshouldtargetrespondentsexperiencingparticularlifeeventstohelpaddressthis.17SeeappendixF


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Lifeevents:Whenparticipantswereaskedaboutwhatgetsinthewayoffinancialwellbeing,themostcommonanswerwaslifeevents.Thefocusherewasontheimpactofunexpected lifeeventsonaperson’sfinancialcircumstances,andnothaving enough of a buffer, or being in the right circumstances, to be able tomanage such an event. For example, participants talked about a range ofunexpected life events that had affected their financial wellbeing: a healthproblemor injury,acaraccident,a sudden largeexpensesuchasmajorcarorappliance repairs and/or replacement, home repairs, losing a job (e.g.redundancy),businessfailure,relationshipbreakdown,domesticviolence,beingavictim of crime, needing to pay for assisted reproductive technology, fallingpregnant,havingtocareforafamilymemberwithadisabilityorchronicillness,oradeathinthefamily.

Iwasin…engineering…IhadaseverebackachelatersoIhadtoleavethejob.Icouldn’tworkafterthat(male,workingage)

Allofasuddentheelectricsgokaputandyoufindyou’vehadaratintheceilingorapossuminmycaseandit’scheweditswaythroughthewiressoyou’vegottogettheelectricianinandtheysay,“Oh,youprobablyneedacompleterewiring”(female,retirementage).

For some, having insurance or savings mitigated these events somewhat. Forothers,lackofinsuranceorsavingsmeantthattheconsequencesoftheseeventsfor their financialandgeneralwellbeingwerecatastrophic.Forallparticipants,therewasrecognitionthatevenwithinsurance,savingsandcontingencyplanning,unexpectedlifeeventswouldalwayshavesomeimpactonfinancialwellbeing.

Previous research has also found intersections between age and events. Forexample, Plagnol’s research [44] found higher financialwellbeing among olderadults once they owned their own homes and when they no longer haddependents(e.g.caringforchildrenand/orelderlyparents).

Thesurveydatashowedthatfinancialwellbeingdecreasedonlymarginallyaslifeeventscompounded.Andthesesmalleffectswerethesameacrossagegroups.However, findings are likely to be skewed by the large proportion of surveyrespondents(75%)whodidnotreportexperiencingany‘events’inthepreviousyear.Amoretargetedapproachisneededtoquantify lifecourse influencersoffinancialwellbeinginthefuture.18

18For instance,aretrospective lifehistoryapproachhasrecentlybeenusedtodemonstratehowsocioeconomic, inter-personal,andhealthtrajectoriesacrossthelifecoursecaninfluencehealthandwellbeing[45,46].Suchanapproachcouldbemodifiedtomoreaccuratelyidentifylifecourseinfluencersoffinancialwellbeing.


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Gender

The relationship between gender and financial wellbeing is complex. It is welldocumentedthatwomenhavedifferentlifeandcareertrajectoriesthatnegativelyaffecttheirearningpotentialandwealthaccumulation[47,48].Thiswasechoedin the focus groups and interviews.Manywomen said that having and raisingchildrenorhavingcaringresponsibilitiesforothershadanongoingimpactontheirfinancialwellbeing.Genderpaydifferenceswerealsomentioned.

It'sphysicallyimpossibleforawomanwhohaschildrentohavethesamesuperasaman.Justimagineif,insomefantasyworld,thewomanwasactuallyvaluedatthesamehourlyrateasaman(female,workingage).

Somewomenalsotalkedaboutbeingtreateddifferentlybyfinancialinstitutionsbecauseoftheirgender.Severaloftheolderparticipantssaidthatearlierintheirlivestheyhadbeenunabletogetaloanintheirownnamesortogetacreditcardwithouthavingahusbandtoactasguarantor.

Forsomewomen,thiscreatedworryinthewaytheythoughtabouttheirfinancesin the present and future. Some of the young women in our study describedfactoringallofthisintotheirfutureplanning.

It'slikewhenareyougoingtohavethebaby?I'm25soifit's28whereamIgoingtoworksothatIcangettheleave,oramIgoingtoholdoffto30andthenisitgoingtobeharderoramIgoingtopushitto35andamIgoingtohaveahousebeforethenorafterthen?SohowmuchhaveIgottobesavingcomparedtohowmuchtravellingcomparedtowhereI'vegottobeworkingforanextendedperiodoftime?(Female,youngperson).

Incontrast,severalofthemaleandfemaleparticipantssaidthatsomemenfeltpressuretobethebreadwinnerandtoprovideadequatelyfortheirfamiliesandthatthiswasdamagingtotheirfinancialwellbeing,becausetheyfeltworriedandpressured,andbecausetheyworkedlonghourswhichmadethemunhappy.

Youknow?Because,…Ifeel,asaguy,ifI’vegotawifeandkids,whichIhopeIwilloneday,it’salotofpressureonmetoprovide.Becauseifwehavekidsandthere’stimeoffforoneofusatleast,…itputsmorepressureontheotherside(male,workingage).

Despitetheimportanceofgenderinthequalitativeaccounts,thesurveydidnotidentifyanysignificantgenderdifferencesinfinancialwellbeingnorininfluencersoffinancialwellbeing.However,therewerelimitationswiththesurvey(e.g.wewere unable tomeasure objective saving levels or super) and while men andwomenmighthavehaddifferentreasonsfortheirfinancialwellbeingresults,theoverallresultsweresimilar.


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Nonetheless,theliteratureandfocusgroupsandinterviewssuggestthatgenderplaysanimportantroleininfluencingfinancialwellbeing,hencefutureuseofthefinancialwellbeingframeworkneedstoconsidergenderinalifecourseframeworkandconsideringfactorssuchastheircaregivingandemploymentstatus.

Employment

Employmenthadasignificantimpactonparticipants’financialwellbeingaccordingto the qualitative phase. Income generated through employment improvedindividuals’ financial circumstances bymaking it easier for them to cover theirexpenses, toacquireassets, and toputa littleasideasabufferor for savings.Participation inworkwas also associatedwith lessworry about one’s financialsituationandagreatersenseofpersonalsatisfactionwithone’sfinancialsituation,andgavetheparticipantsagreatersenseofchoiceandcontrolwhenitcametotheirfinancialsituation.

Butitallstemsfromjobsecurity,knowingthatI'mgoingtohaveajobtomorroworforthenextmonthorso. ThatmeansIcan…havethatsecurityandthenIdon'thavetolivepaychequetopaycheque(female,youngperson).

Beinginworkalsohadapositiveeffectonfuturefinancialcircumstances,throughleave options, building future earnings potential and accumulatingsuperannuation.

WhenIlookatmypersonalleaveandIlookatmylongserviceleaveandIlookatmyannualleave,Ijustthink,‘Wow.Okay.Thisislikeasecurity.’It’s…afinancialcomfortfeelingknowingthat ifsomethinghappenedthefamily,Godforbid,oranything,theyallowthattime…It’s likeaninsurancepolicy(male,workingage).

Inthesamevein,unemploymentorunderemploymenthadanegativeimpactonanindividual’sfinancialwellbeing.Somepeopletalkedaboutlosingtheirjobandthenegativeeffectthishadontheirfinancialwellbeing.Evenforthosenotinthelabourmarket,suchasolderretiredpeople,theknowledgethattheywereunabletore-enterthelabourmarketatanytimeshapedthewaytheythoughtabouttheirfinancialsituation,andwasasourceofconcernorcautionformany.

Idon'thaveajob.Ajobisreallyimportant.IfIhaveajobIknow-yesIgetmoneyfromCentrelinkbutit'snotenough.Whatis$200afortnightgoingtodo?(female,youngperson).

Being able to stillwork keepsme reasonably comfortable but I don'tknowhowlongthatcangoonfor(female,retirementage).


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Others described barriers to finding or staying in work, including experiencingworkplacediscrimination,beingunable to find suitableor affordable childcare,facingthethreatofhavingtheirincomesupportpaymentswithdrawnoncetheystartearningincome,orinsecurework.

The nature and security of work was also important. The more secure theemployment,andthemoreconsistenttheincome,themorepositivetheimpactwasonan individual’s financialwellbeing.Employmentsatisfactionand incomecommensuratewithskillsetallaffectedfinancialwellbeing.

Youmightbe ina jobwhichgetsyoua lotofmoneybut ifyou'renothappy with it then chances are you might be spending money onsomethingthatyouarehappywithtoconsoleyourselfinthatjob(male,youngperson).

Somepeoplesaidtheypreferredworkingforanemployerbecauseitgavethemagreatersenseoffinancialsecurity,whereasotherssaidthattheypreferredbeingself-employedbecauseitgavethemagreatersenseofcontrolovertheirfinancialcircumstances.

The survey data also found that precarious employment affected financialwellbeing.Peopleinthestudyoncasualemploymentcontracts(n=100)hadlessaccess tobankaccounts,credit,and insurance,which is significantlyassociatedwithlowerfinancialwellbeing19.Wheretherewasperceived‘control’amongstthecasualised workers, it partially mitigated the negative impact on financialwellbeing. However, being employed or not was not associated with financialwellbeinginthesurveydata.Thismaybebecauseofthesampleorbecausethedichotomousemploymentvariableisnotsensitiveenoughtocapturedifferencesin financialwellbeing. For instance, thosewho are notworkingmay be in thissituationbecauseofchoiceorbecauseofaforcedredundancy.Asnotedinthelifecourse section, future research and practice should look more closely at thepotential mechanisms (e.g. choice) that may link employment with financialwellbeing.

Education and skills

Asmentioned intheprevioussection, financialeducation,knowledgeandskillswere important enablers of financial wellbeing. But participants from thequalitativephasealsodescribededucationandskillsmoregenerallyasbeingofbenefit to an individual’s long-term financial wellbeing. According to manyparticipants,havinganeducation,havingqualificationsandhavingparticularskillsmadeonemoreemployable,andincreasedthelikelihoodofanadequateincome,leading to greater prospects of financial wellbeing. While some participants

19r=.54,p<.001,n=100


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described the challenges in the short-term associatedwith acquiring skills andqualifications– suchasbeingona low incomeor studying– theywerewidelyconsideredtobeofoverallbenefit topeople’s financialwellbeing inthe longerterm.

In the survey data, therewas no association between education and financialwellbeing, which was a surprising finding. However, education was positivelyassociatedwithhouseholdincome,whichwaspositivelyassociatedwithfinancialwellbeing20. Although no formal tests were undertaken, it is possible thateducationmay indirectly influencewellbeingthroughopportunitiestogeneratewealthasnotedbytheparticipantsinthequalitativephase.

Health and disability/chronic illness

Poorphysicalandmentalhealthanddisabilityarecorrelatedwithpoorfinancialwellbeing [49, 50]. Poor health and disability can put negative pressure onindividualorfamilyfinances,throughthecostsofcare,restrictededucationandemployment opportunities, and low government benefits [51, 52]. This can beparticularlydistressing for low-income individualsor families,notonlybecausetheyhavea lowerpoolof resources todrawfrom,but they typicallyalsohavefewerresourcesleftovertodealwithunexpectedshocks[53].

Thesurvey foundpeoplewithpoorerhealthreported lower financialwellbeingacrossallthreedimensions:havingenough,exercisingcontrolandfeelingcontent.Thisfindingwasconsistent(formentalhealth)afteradjustingforallthepotentialinfluencersconsideredinthisresearch(seeAppendixG).Peoplewithadisabilityalsotendedtoreportlowerlevelsoffinancialwellbeing,buttheserelationshipswererelativelyweak.

Theinterviewandfocusgroupparticipantsspokeatlengthabouthowpoormentalandphysicalhealthnegatively influencedtheir financialwellbeing.Someof themajorreasonsincludedreducedemploymentopportunities,reducedcapacitytomanagemoney and increasedexpenses. Thequantitativephase also identifiedhealthasan influencerof financialwellbeing;especially for thehavingenoughdimension.

The focus group and interview participants described how important goodphysicalandmentalhealthweretotheirparticipationinpaidwork,whichinturnhad positive effects on their financial circumstances, their feelings about theirfinancialcircumstances,andtheircontrol.

20SeeAppendixF


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Beinginagoodfinancialsituationtomewouldbeintrinsicallytiedwithhealth.Soaperson’shealthorlackthereofandabilitytoearnwouldbetiedtogether(female,workingage).

Anumberofparticipantsdescribedinstanceswhenproblemswiththeirphysicalhealthhadcreatedabarriertotheirparticipationinworkandthereforetotheirfinancial wellbeing. Participantswith a low income, in particular, described ill-healthasabarriertotheirfinancialwellbeing.

I’mtryingtogetapart-timejobbutbecauseofmyphysicalissues,it’shard.No-onereallywantstoemployyoufortwodaysaweekoratmyageat55.ButIknowmydisabilitysupportpensioniscomingin(female,workingage).

Oneparticipantexplainedthathermentalhealthconditionaffectedherabilitytomanagingmoneyeffectively:

BecauseI’vegotthisdisease,Idon’treallymanagemymoneyverywell(female,workingage).

Inadditiontocreatingabarriertoparticipationinpaidwork,poorphysicalandmentalhealthalsocreatedadditionalhealth-relatedlivingexpenseswhichplacedpressureonhouseholdbudgets,particularlyfortheoldercohort.

12monthsagonow,[Ihada]prostateoperationandIcouldn'twaitforthepublicsystemanditcostme$5000.IwasfortunatethatIhadthemoney(male,retirementage).

…whenIwasforcedtotaketheredundancyIwasalready66…IwasatthatstagetryingtotopupmysuperasmuchasIcould.IfIhadnothadtheleginjury,youknow,IwouldhaveprobablytoppeditupahellofalotmoreknowingwhatIknownow(male,retirementage).

I'matypeonediabetic…Ihavequiteexpensivemedicalbills…stayingaliveisobviouslyhighlyimportantsothatisthemostimportantthingforme to be financially stable to be able to afford to dealwith that(female,workingage).

Uncertaintyaboutfuturehealthcostsledpeopletostressaboutwhethertheyhadenoughsavings.Wherepeoplecouldmanageit,theycontinuedtopayforprivatehealth insurancedespitebudgetpressurestominimiseworryaboutthecostoffuturehealthexpenses.

Disability was not associated with lower financial wellbeing in the survey,however, the survey did not assess the extent that disability affected people’scapacitytoworkorthenatureofthedisability.


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Household, family and peer influencers

Household and family influencers often closely affect a person’s financialwellbeing.Thisdiffersbasedonageandlifestages.

Household income

Household income is an important influencer ofwealth and financial stress. InAustralia,households in thehighest incomequintile receivedover40%of totalincome,andheldover60%oftotalwealthin2013-14.Thisrepresentsmorethantheshareofincomereceivedbythebottomthreequintiles,andmorethantheshareofwealthheldbyallotherquintilescombined[ABS9,ABS10].Itisthereforenotsurprisingthatalmosttwo-thirds(64.3%)ofAustraliansfacedsomeleveloffinancialstressin2015,with2millionadultsexperiencinghighorveryhighlevelsoffinancialstress[3].

Thesefindingsfromtheliteraturewerealsoreflectedinourresearch.Thesurveyshowed that people who reported higher levels of household income alsoreported higher levels of overall financial wellbeing, even after accounting fordifferencesinfinancialcapabilityandtheotherinfluencers21.

Focus groupand interviewparticipants also identifiedhousehold incomeas animportant influencer of their financial wellbeing. In some cases, income wasunderstoodasamechanismlinkingtheother influencerstofinancialwellbeing.Forexample,poorhealthaffectedsomepeople’sabilitytoremainemployedandthereforetheirabilitytocontributetothehousehold’sincome.

Housing

Housingandhousingexpensescanaffectanindividual’sandhousehold’sfinancialsituation. Housing not only provides shelter but also ‘allows people to takeadvantageofopportunitiesineducation,healthandemployment—themeanstogetaheadinoursociety’[NationalHousingTaskForce,1988:3citedin54].Thecostsofhousing,whichareoftenthelargestexpensefacedbyhouseholds[55],canputpressureonhouseholdbudgets.

Unaffordablehousingcostscontributetopoverty[56],cancompromisehousingstability and lead to overcrowding. Housing pressures increase stress [57, 58],including financial stress; affect financial resilience [59] and erode wellbeing.Inadequatehousingespeciallyaffectsthehealthandwellbeingofchildren[57,58,59].

21Inregressionanalysis,householdincomeshowedasignificantassociationwithoverallfinancialwellbeing,havingenoughtomeetexpensesandfeelingsecure,afteraccountingforthestudyvariables.However,therewasnoassociationbetweenhouseholdincomeandbeingincontrol,whentheotherstudyvariableswerecontrolledfor(seeAppendixG).


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Housing costs and situations placed pressures on a number of people whoparticipated in the focus groups and interviews. In the survey, housing costsrelative to incomewere found toaffect the ‘havingenough tomeetexpenses’dimensionoffinancialwellbeing.Owningahomemayalsomakepeoplefeelmorefinancially secure. Overall, however, household income was a strongerinfluencer22.

Couple dynamics

Coupledynamicsareanimportantcontributortoallthreedimensionsoffinancialwellbeing.Withinhouseholds,womenandmenoften reportdifferent levelsofsatisfaction[60].Thisispartlyrelatedtoanindividual’sshareoftheincomeinthehouse. Research has found, for example, that the higher women’s share ofhousehold income, the greater their financial wellbeing [60]. But beyondwhoearns the income, theway couplesmanage household incomematters to thewellbeingofeachmember,evenmorethantheamountofincomeearntandbywho[61].Financialabuseispossiblythestrongestexampleofthis.

Theimpactofcoupledynamicsonfinancialwellbeingwasdiscussedbymaleandfemale participants from all income levels, butmore emphasis was placed onthese dynamics by people of working age. A number of people spoke about‘playing to strengths’ when it came to the management of money within thehousehold.Theytalkedabouthavingandusingcomplementaryskillsandinterestswhen it came to managing the household’s finances. They reported that thisimproved their financialwellbeingbecause theywere able to takeor let goofresponsibilitywheretheywantedto,toacknowledgewhentheirpartnerhadmoreskillsandtointurnexperiencelessfinancialworry.Arangeofhouseholdstrategieswerediscussed, suchasseparateand jointbankaccounts, systems for trackingdifferent kinds of expenses and managing income and expenses in ways thatenabledeachmemberofthecoupletoexercisechoiceandindependenceintheirfinancialdecisionswhilehavingasenseofcontroloverthefuturedirectionofthehouseholdfinances.

Ihandlethefinanceinour[house]…Ijusthandleitalotbetterthanhedoes(female)

Well,mywife'smoredisciplinedthanIam(male,retirementage).

I’moppositetomyhusband…I’mmoreaboutliveeverydayasitcomes…Hethinksmorelongtermandhewantstobefinanciallystable.Hehasthebuffer.Iwouldn’tevenknowwhat,youknow,whereallthatstuff

22Thisisconsistentwithliteraturewhichhasfoundthatitisdifficulttodisentangletheeffectsofhousingfromincomeeffectsassociatedwithhousingcosts[54].


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is…Youkindofneedsomeonetheretoknowaboutitallandtomanageit(female,workingage).

Whilecoupledynamicsworkedformanypeople,itbecameproblematicifcouplessplitandtherewereseveralexamplesofmoneybeingasourceofconflictandofwomen experiencing financial abuse. Several women (of working age) talkedabouthavingapartnerwhowasexcessivelycontrollingthehouseholdfinancesinawaythatwasdetrimentaltotheirownpersonalfinancialwellbeing.

Iworkedparttimerightthroughthemarriage,myhusbandtravelledallaroundsoIhadtobethereforthechildren…Hewasincontrolofallofthe finances. He was a control freak, you know … he controlledeverything…[We]livedinabigtwo-storeyhouseandwedroveBMWsandwhatnot and a lot of people think that’s everything. But in fact,whilelivingthere,Ihadnothing.Iwaspoormentally.

…IfIwantedtogotoMyertothemakeupcounterorwhatnotandspend$200.00,myhusbandwouldgivememoneywhenhesawfittogivememoneyandhe’dsay, ‘Gooutandbuymakeupbecauseyou’re lookingugly’or‘Goanddothisbecauseyou’relookingfat’or‘Goandbuysomeclothes’.SoIwasalwaysunderthatpressure.Butthemoneystreamwasalwaysthere(female,workingage).

Coupledynamicsarethereforeanimportantcontributortoallthreesegmentsoffinancialwellbeing.Theycouldcontributetothehousehold’sfinancialsituation,they could contribute to the subjective feelingsof eachmemberof the coupleaboutthehousehold’sfinancialsituation,andtheycouldcontributepositivelyornegativelytothesenseofchoiceandcontrolthateachmemberofthecouplefeltintheirfinancialsituation.

Financial dependents and caregiving

Ahousehold’ssocio-economicsituation,suchasthelevelofincomerelativetothenumberofdependentsinthehouseholdorparents’levelofeducation,affectsanindividual’s current and future financial wellbeing. Lower socio-economichouseholds tend to have fewer resources to invest in their children, withconsequencesonthelatter’sopportunitytoprogresssocio-economicallyrelativetochildreninhigherincomehouseholds[62].

Research has also shown that caregiving can negatively impact the financial,physical,andemotionalhealthofcaregivers[63]23.Caregivingcanleadtoalossof

23Althoughtheconsequencesofcaregivingdifferacrosscaregivers.WhileGeorgeandGwyther[64]found‘noevidencethatcaregivers,onaverage,experiencedecreasesin…financialsecurityrelativetorandomcommunitysamples’areportbytheNationalAllianceforCaregiving(NAC)and


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earnings due to caregiving responsibilities and limited financial resources caninfluence the decision to become a caregiver [66]. This can have particularconsequencesforwomenwhoareusuallytheonesexitingorreducingtheirlabourforce participation to become caregivers [66]. The extent to which caringresponsibilities affect a person’s financial wellbeing is also highly variable anddependentonthenatureandextentoftheircaringresponsibilities.Forexample,theABS SurveyofDisability,Ageing andCarers, found female andmale carerswerelesslikelythannon-carerstobeemployedand, iftheyareemployed, lesslikelytobeemployedfulltime[67].Thisaffectsearningsandopportunitycosts,such as foregone earnings, fewer opportunities for career advancement, andlowerretirementsavings,whicharelikelytoaffecttheirfuturefinancialwellbeing[67].

Thesefindingswereechoedinthequalitativephaseofthisstudy,especiallyforpeopleofworkingageandwhowerecaringforachildorfamilymemberwithadisability or illness. People discussed short-term and long term implications,including decreased income, increased expenses (treatment, services, homemodifications,andotherlifestyleadjustments),foregoneworkopportunities,andpoorlongertermcareer,incomeandretirementprospects.

Therewasalsoconsiderablediscussionontheexpensesassociatedwithchildren.According to the participants, having childrenwas a game changer. From thatpointonwards,theirfinancialsituation,theirfinancialplanning,andmanyoftheirfinancial decisions take place with their family in mind. It affects where theychoosetolive,theirdecisionsaboutwork,andhasaconsiderableimpactontheirexpensesfordecades.Theparticipantstalkedabouttheexpensesassociatedwithhavingyoungchildren,includingrecreation,childcareandeducation,andhealthcosts.Othersdescribedtheexpensesassociatedwithhavingadultchildren,suchasboardandlivingexpensesandeducationcosts.

Atthemoment,thebigissueformeismykids.Myboyis13yearsoldandmydaughteris12.Sometimestheywanttogooutwiththeirfriendsandsometimestheywanttohavelunchwiththeirfriends.…IthinkIshouldbeinasituationtosupportthem(female,workingage)

Thecostsof raisingchildren,yeah, it takesaburdenonyour finances(male,workingage)

It'salotharderifyoudon'thavemoneyandyou'retryingtoraiseakid(female,youngperson)

AmericanAssociationofRetiredPersons(AARP)[65]foundthat15%ofcaregiversreportedahighdegreeoffinancialhardshipduetotheircaregiving.


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Iwishhadmoneytohaveanestatetoleavetothekids,whichIhaven’tgot.That’smybiggestworry.(Female,workingage).

Havinga familywithdependent childrenmeant somepeople took fewer risks,workedlongerhoursorstayedinunsatisfactoryjobstoearnenoughincometocoverthefamily’slifestyle.Forothers,havingafamilymeantworkingfewerhours– and earning less – to spend more time with their children. Overall, peoplewantedenoughmoneyforthestandardoflivingthattheydesired,suchbeingabletoaffordschoolexcursionsandholidays.Whereparentswereunabletodothis,itcausedfeelingsofguilt,worryandsadness;thiswasstrongamongstfemalesonlow incomesandsingleparents.Somepeoplealsohadadesire to setup theirchildrenforthefuture,whichaffectedtheirfinancialwellbeing.

Therewereexamplesofpeoplesacrificingtheirownfinancialwellbeingtoensurethefinancialwellbeingoftheirchildren.

Socialisation with money as a child

Childhoodandearlyadulthoodexposureshaveaneffectonfinancialwellbeing,accordingtotheliterature.Youngadultswhoseparentsspoketothemabouttheimportanceofsavings,thefamilyspendingplan,andtheuseofcreditwhentheywere growing up, reported greater financial knowledge, had more positiveattitudes towardsmoney, lessdebtandgreater satisfactionwith their financialstatus [68, 69]. The impact of parents emerged strongly in the focus groups(discussed below). However, the survey showed no association between earlysocialisationwithmoneyandfinancialwellbeing.

Social capital

Socialcapitalis‘anindividual’sconnectionto,orisolationfrom,socialnetworks;their levelof social support in timesof crisis; and theirneed forandaccess tocommunity and/or government supports’ [3;17]. It is a critical resource forreducingnegativeexperiences,supportingstability[21],improvingadaptiveandcopingcapabilities[21,70,71]andsupportingfinancialresilience[3].

Inoursurvey,peoplewhofelttheycouldrelyfinanciallyonothersduringtimesoffinancialstressweremorelikelytoreporthigherlevelsoffinancialwellbeing.Evenwhen accounting for all the other influencers, social capital still had anindependent relationship with general financial wellbeing and the ‘meeting


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expenses’ dimension24. The survey results also revealed that social capital isassociatedwithotherdemographiccharacteristics25.

Several people said that they received financial support from other familymembersorfriendsattimeswhentheyneededit.Thismostcommonlycamefromparents(althoughnotexclusively).Manyparticipantssaidthatparentsprovidedfinancialsupportbyhelpingtomeetcostsofliving,providingfreeorcheapboardandlodging,helpbuyingassets,supportingthecostsofeducationorhealthandprovidingno-interestloans.Forsomeparticipants,eventhoughtheirparentswerenot currently providing themwith financial support, the knowledge that theirparentscoulddosoiftheyneededitprovidedthemreducedtheiroveralllevelofworryandcontributedtotheiroverallfinancialwellbeing.

Iwouldn'tevenbeable togotouniversity if they [myparents]didn'thavethemoney…iftheyweren'tfinanciallywelloffIwouldn'tevengotouniversity,I'dsimplyjustgetatrade(male,Youngperson).

Community and organisational influencers

Financialwellbeingcanbe influencedbyarangeoffactorswithinacommunityandbytheproducts,servicesandsupportsofferedbyorganisations.Thissectionexamines:

1. Communitysocio-economicstatus2. Accessibilityofappropriatefinancialgoodsandservices3. Theroleofcommunityorganisations.

Community socio-economic status

Thesocio-economicstatusofthecommunityorneighbourhoodhasbeenfoundtoaffectthefinancialwellbeingofindividuals[23],bothinregardtohowtheyfeelabouttheirownfinancialcircumstancesrelativetoothersinthecommunity,theresourcesavailableandthecostsofliving[73,74,75].The‘neighbourhoodeffects’caninfluencepeople’swellbeing,independentlyoftheirowncircumstances[76].However,oursurveydidnotfindthatrelativesocio-economicdisadvantageatthecommunitylevelaffectedwellbeing(AppendixF).

24Thisdoesnotmeanthatsocialcapital isnot important for theexercisingcontroland feelingcontentdimensions.Rather,itmeansthatanyinfluenceofsocialcapitalonthesedimensionsisexplainedbyvariationinfinancialcapability,householdincomeandtheotherinfluencers.25Forexample,peoplewithadisabilityreportlowerlevelsofsocialcapital;r=-0.24,p<0.001;thisisnotsurprisinggiventheirhigherratesofsocialisolation[e.g.,72].


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Accessibility of appropriate financial goods and services

The resources and supports available fromgovernments, businesses and socialservicescontributetosocialcapital(Orthneretal.,2004)andarekeyinfluencesinenablingordisablingfinancialwellbeing.Theseeffectsinclude,butarenotlimitedto:

• Theprovisionofaccessible,appropriateandacceptablefinancialproductsand services [77] from traditional financial services through financialinstitutions, insurancecompanies,governmentsandnot-for-profits.Thismightbeinrelationtoindependentlyprovidingtransitionalproducts,suchasbankaccounts, linesofcreditand insurance,or throughpartnerships(e.g.lowandno-interestloans).

• Ensuringfinancialproductsandservicesareeasytounderstand.

• Providingappropriatetoolsandresourcestofacilitateunderstanding,useofanddecision-makingaboutfinancialproductsandservices.

• Actingwithinanethicalframeworkthatfosterstrust.

• Offeringtailorededucationalopportunitiesthatbuildfinancialcapabilityfordifferentgroups/needs.

• Theprovisionofassistanceprogramsforpeopleatriskoforinhardship.

• Digital inclusion to ensure people can access technological tools andresources.

• Regulationofthefinancialgoodsandservicesmarket.

These effects imply that financial services, utility services and human servicesectors across governments, for-profits, not-for-profits and hybrid institutionshaveapotentiallyvitalroletoplayinfosteringfinancialwellbeing.

Focus group and interview participants spoke about the influence of financialinstitutionsontheirfinancialwellbeing.Manyparticipantsspokeaboutgoodandbad financial advice, and how this could improve or damage their financialcircumstancesandfinancialwellbeing.Manypeoplewereverywaryofthesourceoftheirfinancialadvice,andspokeabouttheimportanceoftrustinthosepeopleandinstitutionsprovidingfinancialadvice.Thiswasespeciallythecaseforwomen.

Participant: Yes.That’swhyalotofushaveafinancialadvisor.

Participant: Iwouldn’ttrustone.


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Participant: Iwouldn’teither.

Participant: Ohno,they’regood.

Participant: Ohyes,it’sbeenveryhelpful

(females,retirementage).

Financialproductswerealsodiscussedashavingpositiveandnegativeimpactsonfinancialwellbeing.People likedtheeaseof internetbankingandbeingabletomove their money around. Access to credit and loans were considered to bepositivewhentheywereaffordable,butcouldcreatesignificantfinancialstresswhentheywerenot.Somepeople(especiallyyoungpeople)talkedaboutwantingto‘cut[their]creditcardup’(male,youngperson)butnotbeingabletobecauseitfeltlikeasecuritynet.Othersmentionedtheeasewithwhichtheycouldaccessloansandthedifficultiestheyhadinnavigatingthisandtakinginformeddecisionsaboutwhethertousecredit.

The bankwas like oh but you can borrow all of thismoney and therepaymentsare$1000aweekandIwaslikethat'slikemywholewage,howdoIthenlive?SomakingdecisionsIthink–formeitwasareallylongprocess(female,youngperson).

Overall,workingageparticipantsappearedmorefocusedonthelongerterm.Theydiscussedtheimportanceofaccessingreliableinformationtohelpthemmakeadecisionaboutusingcredit.

Generally, participants spoke in terms of good and bad debt. Access tounaffordablecreditwasunsurprisinglyproblematic.

SoI'vedoneloansbeforeyesitfeelslikeohIhavemoneytodayandda,da,dabutpayingitbackohGodIhavetopayitbackafterallthatmoneyisgone.I'mnotafanofloans.It'stempting,especiallyifyou'rereally,reallyhungryandyougookayI'mgoingtogetaloan,andthenonceIgettotheloanplaceI'mlikeno.SoI'llgoandthenI'mjustlikewhatisitgoing to do forme? Getting a loan and then paying twice asmuch.You'relosingmoney(female,youngperson).

Facilitator: What about things like loans? (…) Interviewee: They'reannoying.Ijustwishtheydon't[sic]exist(female,youngperson).

A large number of participants, especially in the retirement age group, talkedabout the importance of access to superannuation and good superannuationinvestmentdecisionsbytheirfinancialinstitutions,asimportanttotheirfinancialwellbeingoverthelifecourse.Somepeopletalkedaboutthenegativeimpactofnot having access to superannuation prior to the introduction of compulsory


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superannuationin1992,oftakingcareerbreaks,andbeingoutofworkontheiraccumulated the superannuation and what this would mean for their futurefinancialwellbeing.

Community organisations

For some participants, particularly those on low incomes, support fromcommunityorganisationswasextremely importantfortheirfinancialwellbeing.Thissupportcontributedtotheir financialwellbeing inarangeofways.Peopletalked about receiving a range of important supports from communityorganisations,including:

• financialadviceandeducation,suchashelpingthemlearnfinancialskillslikebudgeting

• financialsupportthroughloworno-interestloans,food/foodvouchersandsupportforutilitybills

• advocacyandsupportinhelpingpeopledealwithfinancialinstitutionstomanagedebtorovercomefinancialadversity

• legaladvicetosupportthemthroughdifficultfinancialtimes.

Forsomepeopletheseresourcesweredescribedasuseful,forothers,theyhadhelpedtoturnaroundtheirfinancialsituationandchangedtheiroutlookonthefuture.Severalexplainedthewaysinwhichthecombinationofsupportwiththeirfinancial skills and the provision of direct assistance was what helped themovercomeadifficultfinancialsituationandenterapathwaytofinancialwellbeing.Anumberofpeoplesaidthatthesupporttheyreceivedinbuildingtheirfinancialskills had had a significant impact on their financial behaviours and that this,combinedwiththesecurityofhousing,meantthattheywereinasituationwheretheycouldplanforthefuture.

Societal influencers

There are many societal and structural influences that can affect a person’swellbeing.Differentgroupsatvariedlifestageswillbeaffectedindifferentwaysby these societal influences. This section explores some of themore commoninfluences26,including:

• Governmentpolicy• Financialmarkets

26 Participants in research by the Consumer Financial Protection Bureau [7] acknowledged thepower of the media in shaping consumption behaviours and thus contributing to financialwellbeing.Thiswasnotanareathatemergedorwasfurtherexploredinourstudyandsoisnotincludedhere.


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• Workforcetrends• Costsofliving.

Government policy

Governmentpolicieshaveasignificantinfluenceonfinancialwellbeing[7]throughregulation (e.g. financial services industry, industrial relations); social securitypayments and provision of emergency services; policies (e.g. education,employment, superannuation, housing, retirement); programs (e.g. financialcapabilityanddeliveryofhumanservices);andframeworks,toolsandguides(e.g.ASICtoolsandresourcesandtheNationalStrategyforFinancialLiteracy).

Manyparticipantsdescribed the influence thatgovernmentpolicyhadon theirfinancial wellbeing. The positive effects of policy on financial wellbeing werenoted, including the safety net of income support payments (parenting, carer,disability and unemployment), the provision of the HECS scheme and publicservicessuchastransport,healthcareanddisabilityservices.


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However,peoplealsodiscussedhowpolicyandpolicychangesnegativelyaffectedtheir financial wellbeing by changing their financial circumstances, creatinguncertainty, worry and a perceived lack of control about the future. Manyexampleswereprovidedincluding:

• thelowvalueofincomesupportpayments• requirements to ‘prove’ disability status inorder to continue to receive

disabilitysupportpension• thewithdrawaloffamilypaymentsduetochangesinhouseholdincome• changestopensioneligibility• superannuationanditsinteractionwiththeagepension• theeffectofincomeonincomesupportpayments• thecostofpharmaceuticals• thederegulationofuniversityfees• theeligibilityforincomesupport;andresidentialagedcarepolicies.

Soyoucan’t justautomaticallygo, ‘Oh,my11-year-oldwill lookafterhimselfuntil5o’clockeverynight.’Whenyouactuallyworkwhenyou’reasingleparent,theamountofthingsthathavetogetfactoredinsuchaschildcare,afterschoolcare,whatever,whatyoumakeperhourandwhat you lose in government support is nothing. One of the biggestthingsthattheycoulddowouldberaiseuptheamountthatwecouldearnwithoutitbeingaffected.

Idon’tbelieveinthewelfaretoworksortofcards…becauseI’mnotanimbecile and I can make my own decisions. Moving people ontoNewstartisjustridiculousbecausethingsthathappen,theydon’tjustgoawaymagically after threemonths or six months. They’re long-termfinancialdecisionsthathavemajorimpacts(female,workingage).

In some cases, recent changes affected people’s decisions about work andretirement. Formany people, the uncertainty associatedwith potential futurepolicy changes made it difficult for them to plan and to anticipate how theirfinancialcircumstanceswouldlookinthecomingyears.

Financial markets

Macro-economiccircumstances–nationalandinternational–playanimportantroleinpeople’sfinancialwellbeing.

Theinfluenceofglobalfinancialmarketsbecameparticularlyevidentduringthe2008–2009 global financial crisis (GFC). Although Australia was somewhatprotectedandactedquickly tooffsetadverse impacts, theGFC still resulted inincreasedunemployment rates (especially for youngpeople),made retirement


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lessaffordableformiddle-incomeearners,andaffectedspendinglevelsamongstcertaingroupsacrossthecountry[78,79].

Incomeinequalityhasalsobeendemonstratedtohaveanegativeeffectonthegrowthratesofnationaleconomies[80].Inrecognitionofthis,Hayesetal.’s[77]model of financial wellbeing incorporates societal-level influences throughindicatorssuchasunemploymentrates,GDPandtheGinicoefficient(ameasureofincomeinequality).

Severalparticipantsspokeoftheeffectthatfinancialmarketscouldhaveontheirfinancialwellbeing.Forafew,changestointerestratesandlarge-scalechangestothesharemarkethadhadconsiderableandnegative impactson their financialcircumstances,makingitdifficulttocoverexpensesorplacingfinancialpressureon them, and for one person, his business fell apart and he was forced intobankruptcy. Young people had very little to say about financial markets andworkingagepeoplemadeasmallnumberofremarksabouttheimpactofchangesto interest rates in the context of both paying off mortgages and saving forretirement.Itwasprimarilyolderparticipantswhofeltparticularlyvulnerabletochangesinfinancialmarkets.

Workforce trends

As discussed above, the influence of employment status on people’s financialwellbeingisconsiderable.Fromamacro-level,workforcetrendsshapethetypesofemploymentavailable,employmentstatusandworkingconditions.

One example is the increased casualisation of the workforce [81]27. Theprecariousnessofcasualworkhasbeenfoundto impactonworkers’wellbeingandtheirfinancialsecurity,financialstresslevelsandabilitytomakeendsmeet[82,83;286]28.

Workforce trends affect different groups in varied ways. For example, youngpeopleexperiencehigherlevelsofunderemploymentandcasualisedemployment[85].AndAustralia’stwo-tieredretirementincomesystem(theagepensionandoccupational superannuation) disadvantages people with interruptedemployment histories, namely women [86], Indigenous Australians [87], andcasualworkers[88].

27InAugust2015,2.3millionpeopleworkedascasualemployees,thatis,withoutpaidleaveentitlements–anincreaseofcloseto2%on2005figures[81].28Itisimportanttonotethatsomestudieshavefoundnoevidenceofcasualworkinfluencingphysicalormentalhealth,orjobstress[84].


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Cost of living

Themostcommonlydiscussed influencerof financialwellbeing,apart fromtheindividualandtheirhousehold,wasthecostofliving.Thecostoflivingaffectedpeople’soverallfinancialwellbeingandeachofitsthreedimensions.Itwascentraltowhetherpeoplecouldmeetexpensesandhowmuchmoneytheyhadleftover.Manyparticipantstalkedaboutincreasesinthecostofhousing,utilitybills,food,healthexpenses, runningacar,maintenanceand repairs, insuranceandschoolexpenses.

Facilitator:Whatgetsinthewayofagoodfinancialsituation?

Participant:Ithinkincreasingpricesoneverything.…Inordertoliveyouhavetobuyfood.Youhavetopaymedicalexpenses.Youhavetopayforpetrol,roofoveryourhead,allthosereallybasicthings. Theyjustkeepincreasingincost(female,workingage).

The cost of living affected the way participants felt about their financialcircumstances,howmuch theyworriedabout their financesand their senseofcontroloverfutureincreases.

The main things that I worry about are big bills and they're mostlyinsurancebillsandelectricity,youknowwhatImean(male,retirementage).

Forsome,thecostoflivingweek-to-weekmadefinancialwellbeingastruggle.Forothers,whiletheymanagedcurrentcostsofliving,theyexplainedthattheyhadvery little leftover, worried about the future and the inability to ‘get ahead’.Unsurprisingly,peopleonlowincomesfeltmoreexposedtochangestothecostoflivingthanpeoplewithhigherincomes.

EventhecostoflivingandCPIeveryyear,goingupwithbillsandthings.Ifyou'reonlyonCentrelinkandit'snotmeetingthatstandardatall,itdoesn'tgoinlinewithallthebillsthatincreaseovertheyears(female,workingage).

Onesmall increase in justoneexpensecouldhaveaverysignificant impactontheirfinancialwellbeing.Retiredparticipantsalsofeltmorevulnerabletochangesinthecostoflivingthanpeopleofworkingage.Severalyoungpeoplewhowerelivingathome (not in low-incomehouseholds) feltprotected from increases inlivingcostsbecausetheirparentswereabsorbingthecosts–payingforboard,billsand food. They were aware, however, that these increases would affect theirfinancialwellbeinginthefuture,forexample,ontheirabilitytoliveindependentlyortobuytheirownhome.


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SO WHAT? AN AUSTRALIAN MODEL OF FINANCIAL WELLBEING Drawing on a scoping review of existing literature; one-on-one interviews andfocusgroupswith72people;andasurveyof821peoplelivinginAustraliaaged18andover,wedevelopedadefinitionoffinancialwellbeingthatisrelevanttothelivesofAustraliansofdifferentagesandlifecoursestages.Thisdefinitiontakesinto account the dual importance of objective financial circumstances andsubjectiveperceptionsofthem,andissituatedinaframeworkthatcapturestheindividual,householdandcommunityfactorsthatinfluencefinancialwellbeing.

What is financial wellbeing?

Financialwellbeingiswhenapersonisabletomeetexpensesandhassomemoneyleftover,isincontroloftheirfinancesandfeelsfinanciallysecure,nowandinthefuture.

Ithasthreeinterrelateddimensions(seealsoTable8):

Meetingexpensesand somemoney left over: includeshavinganadequate income tomeet basic needs, pay off debts, and coverunexpectedexpensesandhavingsomemoneyleftover.

Being in control: includes feeling and acting in control of yourfinances.

Feelingfinanciallysecure:includesnothavingtoworrymuchaboutmoney and having a sense of satisfaction with your financialsituation.


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Table8:Amodeloffinancialwellbeing


Meetingexpensesandhavingsomemoneyleftover

Beingincontrol Feelingfinanciallysecure

Dimension1 Meetingexpensesandhavesomemoneyleftover

Definition Includeshavinganadequate income tomeetbasicneeds,payoffdebtsandcoverunexpectedexpensesandhavingsomemoneyleftover

Sub-dimensions Able to meetexpenses

Able to managedebt

Savingsbuffer

Able to afford“littleextras”



Sub-dimensions Having control over your financialsituation

Setting and pursuing goals for futurespendingandlifeplanning




Does financial wellbeing differ for different Australians? A life course perspective

A life course perspective may inform the targeted promotion of financialwellbeing. Interviewsandfocusgroupswith72peopleacrossAustraliashowedthatpeople’sfinancialwellbeingcanbepartlydeterminedbywheretheywereintheirlifecourseandtheeventstheyareexperiencingwithintheirlives29.

Youngerpeopletalkedaboutincreasedexpenditureafterleavinghome,workingageparticipantsspokeoftheir increasing incomebeingoffsetbyredundancies,health issues, relationship breakdown and, for women in particular, caringresponsibilities.Pension-agedparticipantsfoundthatretirementcausedthemtoadjusttheirstandardoflivingafterleavingthepaidworkforce.

29Thequantitativedataanalysiswasnotsensitiveenoughquantifytheextentthatlifestagesinfluencedfinancialwellbeing.Thiswasdueto lownumbersexperiencingspecific lifeeventsandthereforeaninabilitytoexaminehowagemayhaveintersectedwithotherfactors(e.g.gender,maritalstatus)toinfluencefinancialwellbeingacrossthelifecourse.Quantifyingthe life course effects on financial wellbeingwould either require amuch larger sample or amore in-depth study ofparticulargroups.


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What shapes financial wellbeing?

Anecologicalmodelisausefulframeworkforunderstandingfinancialwellbeing.Individual,household/family/peerandcommunity-levelfactorswerefoundtobeimportant in people’s lived experiences and their perceptions of financialwellbeing.Strong influencersof financialwellbeing include: financial capability,access toappropriate financialproductsandservices (financial inclusion), socialcapital,householdincomeandmentalhealth.

Inaddition,theliteratureandlivedexperienceofpeoplelivinginAustraliashowedthatgender,employment,physicalhealth,parental influence,coupledynamics,havingcaringresponsibilitiesandfinancialdependents,policychangeandthecostoflivingallaffectpeople’sfinancialwellbeing.Thelackofhousingaffordabilityandincreased living costs are significant structural issues across Australia and areparticularly problematic for low-income households. Further, the demographicsqueezeofsupportingdependentyoungpeopleandageingparentsislikelytobeplacingadditionalfinancialpressureonhouseholds,particularlylowincomeones.

The financial wellbeing tree

Financialwellbeing isnot justaboutan individual’s situation. It is important tounderstand that financial wellbeing is also influenced by people’s household,community and social contexts. This is called taking an ecological systemsapproachtounderstandingfinancialwellbeing.

Onewaytothinkaboutfinancialwellbeingandthefactorsthatinfluenceitistoconsider a tree (see Figure 2). The tree’s health (or its financial wellbeing) isaffectedbyfactorswithinandoutsideofitscontrol.Thetree’sfoliagehasthreemainbranches,which represent theprimarydimensionsofwellbeing (meetingexpenses, being in control and feeling financially secure). Each branch has anetworkofsmallerbranchesthatrepresentthesubdimensionsandindicatethehealth of the tree. The tree’s root system draws in important nutrients thatcontributetoitsgrowthduringfavourablecircumstances(thesearetheprimaryinfluencersoffinancialwellbeing).Expectedandunexpectedexternalconditionsor influences will affect the tree (what's happening at a household, family,communityorsocietallevel)andtherewillbeplannedandunplannedeventsthatthe tree needs the resilience to respond to (financial resilience to respond tofinancialshockandlifeevents).Finally,whathappenstodaymattersforthetree,but its future wellbeing can change and actions today and tomorrow can beprotectiveorhinderingfactorsinthetree’sfuture.

Figure2:Thefinancialwellbeingtree


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What does this mean for financial counsellors, the financial services sector, and other policy actors and stakeholders?

Thisresearchwillhelppeopleandorganisationsworkingtoimproveandpromotefinancialwellbeingunderstandwhat itmeans forpeople,what influences theirfinancial wellbeing and how their life stages and life events can shape theirfinancialsituation,actionsandperceptions.


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To help illustrate these points, we have developed four scenarios using thefindingsfromthequalitativeandsurveyresearch(SeeTable6).Thesescenariosdemonstrate the diversity of people that may use or need different kinds offinancialservices.

Scenarios of financial wellbeing

Myriam–lowonthebeingincontroldimension

Myriamisa20-year-oldthathasrecentlymovedoutfromherparent’shousetomoveinwithherpartner.Myriam’sfinancialknowledgeislimited;whenshewaslivingwithherparents,theylookedafterallthefinancialdecisionsofthehousehold,soMyriamhasnothadmuchexposuretofinancialdecision-makingprocesses or received financial advice.Her partner,who ismore financiallysavvy,now looksafterthehousehold’s financesbuthisexcessivecontrolofhowmoney is spent is making her feel less financially autonomous and iseroding her confidence andmental health. The risk forMyriam is that herfinancial self-efficacy will continue to deteriorate making her feel lessfinanciallysecure,whichinturncanreduceherfinancialwellbeing.

Kent–highonthemeetingexpensesdimensions

Kent is amiddle-agedprofessionalworker in a high-paying job.His incomeallows him to live comfortably: he has enough to cover all cost-of-livingexpensesandhaveabitleftovertosaveanddothethingsheenjoys.Healsohasaccesstofinancialproductsandservicestodrawonincaseofafinancialshock, such as a line of credit and insurance. Kent feels he balances hisspendingandsavingsquitewell;heisorganisedwithhismoneyanddoesnotspendimpulsively.Asaresult,itislikelyhefeelsfinanciallysecureandthathehas choice over his financial decision-making, increasing his financialwellbeing.


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Tom–Lowonthefeelingfinanciallysecuredimension

Tom is financially worried. He recently got laid off which has significantlyreduced thehousehold’s income, and a larger than expected electricity billnowhashimconcernedhewillnotbeabletomeetneedsinthepresentandthefuture.Tomusedtohaveacreditcardbutnotanymoreduetohispoormoneymanagementskills;hethoughtitwasbesttogetridofitashetendstospend impulsively.Hethinksaboutmoneya lotand isnotsatisfiedwithhiscurrentsituation.TheriskforTomisthatthelossofhisincome,combinedwithhislackofaccesstofinancialproductsandservices,putshiminaviciouscirclewhereheisunabletomeetexpensesandhaslittlecontroloverhowtospendhismoney,leadingtofinancialworryandweakeninghisfinancialwellbeing.

Azzie – high on the being in control dimension, but low on themeetingexpensesdimension

Azzie is 35 years old and has a mild intellectual disability. She is casuallyemployedforonedayaweekatalocalorganisation,helpingthemwiththeirfiling,andalsoreceivesapensionfromthegovernment.Themoneyshemakesfromherwork andher government allowance allowher tomeet her basicneeds,howeverthereislittleifanymoneyleftovertosaveorspendonlittleextras.Althoughshedoesnothavealotofmoney,Azzieisveryorganisedwithhermoneyand,withsomehelpfromherparents,balancesherspendingandher earnings. Her parents have always stressed how important it is to livewithinone’smeansandshelearntalotfromthemabouthowtothinkcarefullyaboutwhattospendhermoneyon.WhileAzziemaynotbeabletoincreaseherincome,beingincontrolofherfinanceshelpsherfeelfinanciallysecure,preservingherfinancialwellbeing.


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Peopleandorganisationsworking to improveandpromote financialwellbeing,such as financial counsellors, employers, financial institutions, communityorganisations,regulators,andpolicymakerscanconsidertheroletheyplayandhowtheymightinfluencefinancialwellbeingoverall,ortheindividualdimensionsoffinancialwellbeing(seeFigure2).Forexample:

• financial service organisations can ensure that financial products andservicesareappropriate,affordable,tailoredandaccessible

• financialeducatorsandcounsellorscanfocusonidentifyingtheaspectsofpeople’slivesthatcanbecontrolled,suchaspositivefinancialbehaviourslikemanagingdebt,saving,andsettinggoalsforthefuture

• governmentcanhelpregulatethefinancialservicessector

• governmentandcommunityorganisationscanassistwithresourcesandtoolsthatassisttosupportandimproveindividualdimensionsoffinancialwellbeing,especiallymeetingexpensesandbeingincontrol

• differentorganisationscantarget,supportandcross-referpeoplewhoareparticularlyvulnerable(suchaspeoplewithlowlevelsofsocialcapitalandeconomicresources).


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Table9:Examplesoftherolesdifferentstakeholderscanplayinsupportingandimprovingfinancialwellbeing

GoalsforImprovingfinancialwellbeing Meetingexpenses Beingin

controlFeelingsecure

Actorsandstakeholders

Helpingpeopletomeetexpenses

Helpingpeopletoachievemanageable

debtlevels

Helpingpeopletoputasideasavingsbuffer

Enablingpeopletoafford“littleextras”

Supportingpeopletohavecontrolovertheirfinancialsituation

Helpingpeopletosetandpursuelong-term

goals

Limitingfinancialw

orry

Improvingsatisfactionw

ithfinancialsituation

Individuals x x x x x x x x

Households x x x x x x x x

Financialguardians x x x x x x x x

Financialcounsellors/educators x x x x x x x x

Financialservicessector x x x x

NFPsinfinancialservices x x x x x x

Communityorganisations(non-financial)

x x x x x x

Utilityproviders x x

Regulators–ieASIC x x x x x x

Government(social&humanservices) x x x


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How can we measure financial wellbeing?

Thisresearchsupportsmeasuringtheindividualdimensionsofwellbeingaswellasfinancialwellbeingoverall.

Thethreedimensionsoffinancialwellbeingwerehighlycorrelatedwitheachotherand, while there were some exceptions, the factors that influence financialwellbeing largely affect the three financialwellbeing dimensionswith a similarmagnitude.Finally,allthreedimensionsoffinancialwellbeingwereconsistentlyassociatedwithoveralllifesatisfaction.

Thereisalsoevidencethatsupportsexaminingthethreedimensionsoffinancialwellbeingseparately.Statisticalanalysisindicatedthatfinancialknowledgewasanindependent predictor of exercising control, but it was not for the meetingexpensesorfeelingsecure.Likewise,socialcapital,bettermentalhealthandfewerfinancial dependents were positively associated with the meeting expensesdimension.Inallinstances,thesenuanceswouldbelostbyfocusingexclusivelyonanoverallmeasureoffinancialwellbeing.Finally,andperhapsmostimportantly,thereweredifferentdistributionsofscoresforeachofthethreedimensions.Forexample,thereweremorepeopleinthelowestcategoryforthemeetingexpensesdimensionthaninbeingincontrol.Thisdistinctionwaslostintheoverallfinancialwellbeingscore,whichisanaverageofthethreedimensionscores.

Furtherworkisrequiredtodeterminemeasuresoffinancialwellbeing.However,werecommendthatfinancialwellbeingshouldbemeasuredusingits individualdimensionsandoverall.Thiswillhelpunderstandwhichfactorspredictfinancialwellbeingandhelpdeterminewhetherpeoplefromspecificgroupswithspecificneedsaremakingprogressoverall andwithineachdimension.Future researchshouldexaminehowfinancialwellbeingchangesovertimeforthepopulationandparticular groups and the influence of different reference points on financialwellbeing scores.AppendixHoutlines someof thenext steps fordevelopingameasurementsystemforfinancialwellbeing.

Limitations

Some limitations of the research should be considered when interpreting thefindings.Theuseofcross-sectionaldata in thesurveyrestricts the inferenceofcause and effect. Self-reported measures were also used over objective orexternallyverifiablemeasures.Itisthereforeimportantthatfutureresearchaimsto replicate these findings using longitudinal research and objectivemeasureswhere applicable. That said, the self-reported measures tend to get higherresponserates,whichwasimportantforthesample.

For the qualitative phase, the focus group sample recruited through therecruitmentcompany,whilediverse,capturedthehighandmiddleincomegroups


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butthelowincomegroupswereatthehigherendoftheincomebracketsselected.Forthatreason,the interviewsbecameparticularly importantforcapturingtheperspectivesofpeoplewithlowincomesandpeopleexperiencingchallengestotheirfinancialwellbeing.Womenwereoverrepresentedintheinterviewsample,andfutureresearchintogenderedconstructionsoffinancialwellbeingamonglowincomegroupswouldenrichtheevidence.Whilethesurveywasunabletocapturethe detail identified in the qualitative research, the literature and qualitativeresearchdemonstratetheimportanceoffutureresearchwithspecificgroupssuchaspeoplewithadisabilityandpeoplewithcaringresponsibilities.

Conclusion

This research is among the first in Australia to begin developing a model offinancial wellbeing and the factors that influence it. It represents a first steptowardsunderstandingwhatfinancialwellbeingis,whatitmeanstopeoplelivinginAustraliaandtoidentifywhatinfluencesit.


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Exploring Financial Wellbeing in the Australian Context ... · Exploring Financial Wellbeing in the Australian Context iii UNSW Research Team Professor Kristy Muir, Dr Myra Hamilton,