Geelong, Australia
More than one in four Australians are already likely to be experiencing some level of financial distress as cost-of-living increases and rising interest rates bite – but many are unaware of it, according to Christians Against Poverty.
Stuart Sampson, learning and development manager at CAP Australia, told Sight that many people are already experiencing at least one indicator of financial stress – such as not being able to meet financial commitments or worrying over their finances – but may “wouldn’t even exactly realise they are in financial stress”.
“There are a lot of Australians at the moment who are pretty vulnerable to crisis, especially as interest rates rise. We have a very indebted population – a lot of Australians carry a very large debt burden and so changing financial circumstances could be a real crisis for them.”
PICTURE: PKpix/iStockphoto
Sampson believes that the situation is likely to worsen as more people realise they are among the quarter of the population who is experiencing financial stress.
“I think a lot of people live in a little bit of blissful ignorance to their financial situation…especially if people live week-to-week using credit or credit cards and personal loans or drawing down on their mortgage to keep up with the cost-of-living,” said Sampson. “They…don’t realise the situation they’re in financially. People don’t know how much money they’re spending on certain bills or household goods or groceries…So I think actually what we’ll see as cost-of-living pressures increase is more and more people actually start[ing] to realise they are experiencing some kind of financial stress.”
In response to the growing crisis, CAP Australia has recently released a free Financial Wellbeing Scale aimed at helping people understand their financial situation and well-being. Those taking part are asked to answer a series of questions about their finances and attitudes toward them and will then be sent a score between zero and 100.
Sampson said the scale, which was created by the Melbourne Institute: Applied Economic & Social Research at The University of Melbourne and the Commonwealth Bank of Australia, provides a first step for people who are worried about their finances.
“Now is a really important time, rather than just being consumed by the worry and the panic of the changes…to check in [with] our Financial Wellbeing Scale that can really help people just get a bit of a sense, a bit of a picture of where they are at financially, not just how much money is in their bank account but just how well prepared they are for financial change.”
Sampson said that about one in 10 Australians are currently scoring in the lowest 25 points of the scale while about half of people indicate they are “just getting by financially”.
“Just being aware of where you are can be really insightful – it helps you maybe initiate change…It can be a good primer to taking action.”
CAP is also scaling up its “money mentor” initiatiive under which church-based volunteers receive training to help people manage their finances.
We rely on our readers to fund Sight's work - become a financial supporter today!
For more information, head to our Subscriber's page.
The scheme, which has been run as a pilot program, over the past 12 months, now has slightly more than 60 mentors operating through just under 30 churches around Australia. Money mentors receive three weeks of training which is conducted individually and in groups online.
Sampson said CAP is now looking to expand the program following the success of the pilot.
“We are really now looking to put the call out to churches to get more [money mentors] trained…” he said. “We’re really ready to put out the call to churches at the moment to say ‘Hey, please get involved, get some people in your church to train because people are really starting to think about and worry about money…and don’t know where to start, don’t know how to talk about it and don’t know who to talk about it’.”
“As a church we have the opportunity to step into that space and train people to walk alongside those who are vulnerable, those who are experiencing financial distress and those who just need to have a conversation about their finances so they can feel prepared to navigate the changing and challenging times ahead…We want to see churches equipped to be able to do that really well.”
For more information on the money mentor program, visit https://capaust.org.
