Following the Morrison government’s announcement of the third stimulus package, new research has shown that the average Aussie could not survive a week without pay, meaning they will need government assistance during the COVID-19 crisis.
According to comparison site Finder, 19 per cent of Australians’ savings would run out in just seven days if they lost their employment.
Finder said if the worst case scenario becomes true and 2 million Australians are out of a job, 380,000 could end up broke in a matter of days if they were forced to live off their savings.
Graham Cooke, insights manager at Finder, urged those that are still employed to look at building emergency funds if the employee has the means to do so.
“To do this, consumers need to minimise spending and look for places to save money in all areas of life – particularly financial products. A tiny difference to an interest rate can lead to savings in the hundreds of dollars or more,” Mr Cooke noted.
Finder also noted that help is available to individuals who are struggling to pay their bills due to the COVID-19 outbreak, with lenders being supportive to consumers.
“If you can’t pay your bills, or could really use some short-term relief, call lenders and utilities that you owe money to and ask them what help is available,” Mr Cooke said.
Money.com.au has independently found 4.2 million Australians were living hand to mouth well before the coronavirus crisis, suggesting that they will need government support to survive the crisis.
The survey reveals nearly a third (32 per cent) of employed Australians are either in credit or have under $100 left in their pocket, after paying all their essentials each month. Essentials refer to mortgage/rent, bills, groceries, kids’ expenses, household maintenance and supplies, and loan repayments.
One in five (21 per cent) is either in credit or only have up to $50 left each month, after paying for essentials.
Worse still, 70 per cent of Australians believed their discretionary income would have been lower or the same this year, even before the crisis (33 per cent said it would have been lower).
The government’s cash handouts for lower-income Aussies was designed to inject money back into the economy. However, licensed financial adviser and Money spokesperson Helen Baker predicts this won’t be the case.
“The survey results confirm that Australians were already struggling to make ends meet and therefore have no safety net, with low wage growth and increases in household expenses the main factors.
Businesses and workers have been so significantly impacted from coronavirus – particularly the travel, hospitality and entertainment industries – that there are forecasts there will be 2 million unemployed.
No one knows how long this pandemic will last and how much further the economy will decline, so those receiving government assistance will need their cash payments immediately to keep living, as fears grow around when, and if, their next paycheck will come through.
“The findings also show that our older population are struggling the most when it comes to having leftover spending money, with 43 per cent of over-60s admitting they’re either in credit or have under $100 left over after paying for essentials every month. It’s concerning, given that they’re at a stage in their lives where adequate funds should be set aside for retirement,” Ms Baker concluded.
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