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Financial Hardship Hits Younger Australians

Australia | Mar 07 2023

Research from National Australia Bank’s consumer insights report has shown financial hardship to be at a three-year high, with younger Australians the most likely to be suffering hardship.

-Financial hardship increases to highest level in nearly three years
-Amid rising costs of living, four in ten Australians were experiencing financial hardship in Q4 of 2022 
-Not having enough money for emergencies listed as most common cause of hardship
-Younger Australians appear most at risk of experiencing financial hardship

By Danielle Austin

Financial hardship among Australians remains on the rise, with rapidly rising interest rates and cost of living putting more financial pressure on households, according to National Australia Bank.

The bank’s research identified one in three Australians found money to be a significant cause of stress in their lives in the closing quarter of 2022, with one in four feeling they are struggling to make ends meet.

While financial hardship increased across most income groups, there remains a wide gap in levels of perceived financial hardship between lower and higher income groups. Of the former category, 51% reported feeling financial hardship compared to just 31% of the latter category. 

Younger Australians skip out on repayments as they feel the pinch of rising costs 

Despite financial hardship now being at an almost three-year peak amid ongoing consecutive cash rate raises, being unable to meet mortgage repayments remains a lower concern for those experiencing financial hardship.

Instead, as per the bank’s research, not having enough money for emergencies was identified as the most common form of hardship, impacting 21% of Australians, followed by having insufficient money for food and basic necessities, which impacted 16% of Australians. 

Although emergency costs impacted on all age groups, having insufficient money to pay for food and necessities was felt significantly more by younger consumers, with 28% of those aged 18-29 impacted. 

According to the bank, hardship remains the most widespread in this younger age group. It also increased with the greatest momentum in this age group in the fourth quarter, while hardship remained largely unchanged in older demographics. 

While one in five Australians claimed to have missed a bill or loan repayment in the fourth quarter, NAB's research highlighted younger consumers were more likely to miss a repayment. The bank found 34% of Australians aged 18-29 had missed a repayment in the quarter, up from 31% in the previous quarter, with the trend declining consecutively for each age group. 

Within the quarter, 16% of this younger demographic missed a loan repayment to friends or family, 15% missed a phone or internet bill, 13% missed a buy now pay later repayment, 13% missed a rent payment, 11% missed an insurance repayment, 1% missed a personal loan repayment, and 10% missed a payday loan repayment. 

Geography plays a significant factor in financial stress 

The bank’s data suggests those living in rural and regional areas were significantly more likely to feel financial hardship than those living in inner city regions.

The percentage of people in rural areas who reported financial hardship lifted to 54% from 47% in the previous quarter, while in regional cities the percentage lifted to 52% from 46%, and in capital cities to 33% from 30%.

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