Australians assessed as “thriving” financially have rebounded after sliding backwards during the first six months of the COVID-19 pandemic, according to Financial Mindfulness.
The firm’s Financial Stress Index (FSI) showed that 25.8% of 645 respondents were rated as “thriving”, a proportion that was 18.8% pre-COVID, but crashed 2.4% during the first six months of 2020.
The research had also found an almost 10 times increase in those that experienced finance distress due to COVID-19, while 64% of people experienced financial shame.
Andrew Fleming, Financial Mindfulness chief executive and founder, said Government support likely stopped financial stress from spiralling as people became uncertain about their financial position during the pandemic.
“When people stopped going out, their personal savings increased and at the same time interest rates were adjusted to their lowest levels in history,” Fleming said.
“The combination of extra savings and cheap money fuelled a personal and Australia-wide economic bounce back. This is reflected in the FSI data collected at February 2021.
“This ‘bounce-back’ is evidenced in falling unemployment, gross domestic product (GDP) levels increasing and another property boom.”
The proportion of respondents that were “managing” fell from 41.5% in the first six months of the pandemic to 26.1% in the six months from September 2020 to the end of February 2021.
A smaller number of people in chronic financial stress, categorised as “distressed” continued to increase throughout the pandemic, with financial and psychological factors the main drivers.
Those who identified as excessively eating, drinking, smoking due to their financial situation returned to pre-COVID levels.
On average 16% of people often had physical stress relating to their money worries and 71% were distracted because of financial concerns.
Agitation was the most common somatic symptom of financial stress (71%), followed by tension (69%) and inability to “wind down” (65%).
Many took an “ignorance is bliss” approach, either ignoring the situation (57%) or recklessly spending (57%).
66% of people note financial stress had negatively impacted their relationships and 59% experienced conflict with loved ones.
“While it is clear that some people have bounced back, there are many Australians who unfortunately continue to experience considerable financial stress,” Dr Nicola Gates, Financial Mindfulness consultant clinical neuropsychologist said.
“Inequity is increasing in Australia, and increasing inequality is associated with increases in financial distress.”