1 in 3 families financially underprepared

04-Apr-2017

By Daniel Paperny

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Australians were falling short of their financial goals and one in three family households were at risk of being financially underprepared in the face of an emergency, according to a new study from Commonwealth Bank of Australia (CBA).

In a study of 1000 respondents by ACA Research and commissioned by CBA, more than half (56 per cent) were found to not have enough savings to handle a temporary loss of income and one in three Australian households would be unable to find $500 in an emergency.

One in three Australians, according to the study, were found to have consistently spent more than their income in four consecutive months over the past 12 months.

In addition, 46 per cent of respondents believed they were not progressing towards their financial goals and 45 per cent said they were uncomfortable with their current level of spending.

Commenting on the findings, CBA executive general manager of digital Pete Steel underlined the significant role banks should play in providing financial advice and helping customers achieve financial well-being.

“We’ve been working with our behavioural economists and other industry experts to pave a path toward financial well-being solutions,” Steel said.

“While we will always want to deliver convenience for customers, we also want to be able to provide them with the tools they need to better manage their money.”

The bank has responded by trialling new solutions for transaction account users through its Innovation Lab, including the Savings Jar, a savings app allowing customers to set aside pots of money for unforeseen events by rounding up daily transactions.

The app worked by encouraging customers to save with motivational messages as their ‘coin jar balance’ went up, but giving them the option to access their money in their transaction account when they needed it.

Unlike micro-savings app Acorns Grow, the funds remained as part of customers’ overall transaction balance rather than being invested into a model portfolio.

Funds were deducted from a customer’s main account first and the Savings Jar second when it came to everyday purchases.

“Savings Jar was created to see if we can help a subset of these customers save for one of these emergencies without even knowing they’re doing it, by simply rounding up transactions to the nearest dollar,” Steel said.

“The benefit to customers beyond becoming more financially resilient is for those who don’t save or think they can’t save, this is a small step into getting them into the habit of doing so.”

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