The latest ME Bank Household Financial Comfort Report was released in June. This provides a welcome counterpoint to all the gloomy consumer sentiment surveys which seem to tap into our collective pessisism about the future. How are we feeling right now?
Most household segments experienced an improvement in financial comfort over the past 6 months. This has been driven by improvements in their investments, savings, capacity to handle an emergency and standard of living in retirement. The biggest improvement is being felt by "empty nesters".
The financial comfort of "retirees" has deteriorated by 5% over the past 6 months - not surprisingly given their relative high exposure to cash investments which have been affected by the decrease in bank deposit rates. This sector is generally debt free so does not welcome interest rate cuts.
The top 4 worries?
- the cost of necessities
- level of savings
- ability to maintain standard of living
- the global economy
- Despite an improvement in household savings and in investments, 56% of households are opting to direct discretionary savings towards making larger loan repayments rather than invest in direct shares, bonds or make voluntary contributions to superannuation.
So overall we are comfortable right now but worried about the future. Nonetheless most households remain optimistic about their financial situation with half expecting an improvement in their situation over the next 12 months.