ANZ's latest financial wellbeing survey revealed that four socio-economic factors - health, unemployment, earning potential, and life stage - are 'most significantly' affecting people's financial wellbeing.
Health was found to be the the biggest player, having an even stronger relationship with financial wellbeing than saving and spending behaviours.
ANZ surveyed 3,552 people - across different stages of life and from different locations - to understand the links between 'drivers' of financial wellbeing.
The average financial wellbeing score was found to be 64/100, with men more likely to score higher than women (66 compared to 62).
Additionally, it was found that the younger people are more likely to be less confident financially.
'Younger adults' had an average score of 59; 'young families' had a score of 58; 'older families' had a score of 64; and 'retirees' had a score of 77.
These scores were derived from measuring four components of financial wellbeing:
- Ability to meet everyday commitments
- Feeling comfortable about your financial situation
- Financial resilience
- Feeling secure for the future
The findings revealed four groups of financial wellbeing status: no worries (29%), doing OK (43%), getting by (17%), and struggling (11%).
Struggling financially goes hand-in-hand with struggling health-wise
It was found that people who reported they were struggling financially were more likely than the average Australian to be struggling with their physical and/or mental health.
Specifically, 68% of those struggling financially described their mental health as fair or poor, compared to 28% of Australians overall.
The findings were similar for physical health - 57% of struggling respondents had fair or poor physical health, compared to 27% of Australians overall.
After health, unemployment had the second largest socio-economic impact on financial wellbeing.
It was also found that those that were struggling were more likely to be impacted by job loss/redundancy in the past 12 months due to the pandemic.
The report said that the pandemic affected how people felt about their financial situation, how they handled their money, and their financial wellbeing.
Earning potential was the largest 'enabler' of financial wellbeing.
Household income was found to positively correlate with financial wellbeing, and a person's level of education was the 'largest contributor' to their earning potential.
Professor Elaine Kempson from the University of Bristol said financial wellbeing is a combination of two factors - how much money you've got, and what you do with it.
"The survey clearly shows the relatively limited role that financial knowledge plays – financial behaviours are much more important, even on a relatively low income," Ms Kempson said.
"What you do with your money can make a situation better or worse."
Image by Hush Naidoo Jade Photography on Unsplash