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WA households shrug off economic gloom

Published on 25/01/2012

79% of WA residents expect their financial wellbeing to remain the same or improve this year even though 34% believe the economy will deteriorate in 2012.

The latest ING DIRECT Financial Wellbeing Index shows WA households continue to gain in financial wellbeing with the state’s Index score rising from 105.9 in Q3 2011 to 108.8 in Q4 – above the national score of 105.6.

Key findings for Q4 of 2011 (surveyed in January 2012)

  • 64% of WA households say their financial wellbeing remained stable or improved in 2011. Key factors included:
    • 42% Building extra savings in the bank
    • 42% Reduced spending  on unnecessary purchases
    • 27% Improved household budgeting
    • 24% Securing a better paying job
    • 21% Making a lump sum payment on the home loan.

However:

  • 35% say their financial wellbeing fell behind last year – rising to 68% among low income households. The main reasons were:
    • Rising living costs (79%)
    • Investments that lost money (26%)
    • Rising credit card debt (21%)
  • 34% of WA residents believe the economy will deteriorate in 2012
  • Higher fixed costs including rising taxes, food, power and transport bills are the main factor for concern in 2012 cited by 33% of the state’s households.

The quarterly Financial Wellbeing Index rates household comfort levels across six key aspects of personal financial wellbeing including credit card and mortgage debt, savings, investments, household income and ability to pay bills. Respondents rated their personal comfort level across each area on a scale from 1 (‘very uncomfortable’) to 7(‘very comfortable’).

The overall Household Financial Wellbeing Index for WA the fourth quarter of 2011 is 108.8 – an increase on the state’s third quarter Index of 105.9, and above the national Q4 Index of 105.6.

Western Australians broadly continue to enjoy strong financial wellbeing with 64% of households gaining ground or maintaining their financial position in 2011.

Other findings

  • 35% of households fell behind (rising to 68% among those earning less than $70,000p.a.).
  • Increases in basic household expenses (food, power, transport) were cited as the key challenge by the majority (79%) of these households.

Looking ahead

  • 34% of WA residents believe the economy will struggle in 2012 though only 21% expect their personal financial wellbeing to decline (37% among low income earners).
  • The challenge of higher taxes and living expenses in 2012 is the chief concern for 33% of WA households.
  • This is followed by fears of household ability to fund major purchases such as a house, car or holiday cited by 16%.

Mr Don Koch, CEO of ING DIRECT, says “WA households overall continue to enjoy high levels of financial wellbeing. By focusing on growing savings and careful budgeting, households are building a buffer against any possible slowdown in the economy. “

“The challenge of rising living costs is especially difficult for low income households and this is an area where careful budgeting becomes essential” adds Mr Koch.

Download the ING DIRECT Financial Wellbeing Index Q4 Report

Media contact:
Caroline Thomas
Ph: 02 9018 5160
M: 0413 317 225
caroline.thomas@ingdirect.com.au

Research methodology
The ING DIRECT Financial Wellbeing Index was complied by Galaxy Research from the online responses of 1,013 households between Thursday 5 January and Tuesday 10 January 2012 (Q4). The data was weighted by region and household size to reflect the Australian household population based on the 2006 census. The level of savings reported in the study is also calibrated to APRA national bank total deposits (households) to ensure accuracy of household savings levels.

About ING DIRECT
ING DIRECT pioneered branchless banking in Australia by offering the first online, high interest, fee free savings account. Our low cost operating model allows us to pass these savings on to the customer in the form of great value products and services. Today, ING DIRECT has more than 1.4 million customers with $26 billion in deposits and $38 billion in mortgages and a range of innovative banking products.
Please note ING DIRECT is never abbreviated to ING.

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