Despite the COVID-19 outbreak taking its toll on the economy, Australians are unexpectedly comfortable with their finances, according to a new report.
Financial comfort amongst Australians defied expectations of a slowdown and hit a near-record high over the six months to June, according to the latest ME Bank study.
Casual workers, the unemployed, low-income earners, and single-parent household surprisingly reported improvement in financial comfort. However, comfort levels in these groups are still lower than the average household and higher-earning Australians.
Jeff Oughton, a consulting economist for ME Bank, said Australians took comfort in several government programs rolled out to ease the risks of the outbreak.
In fact, almost 40% of households said they were able to take advantage of at least one major government payment and other assistance. Roughly one in five tapped into JobKeeper and JobSeeker payments.
In a previous Your Mortgage report, figures from The Australia Institute show that the JobSeeker Coronavirus Supplement instantly lifted 425,000 Australians out of poverty when it was first announced.
Aside from benefitting from government stimulus packages, Australians also made adjustments to their finances to prepare for any possible setbacks amid the pandemic.
"Fear of COVID-19 and a very weak labour market triggered many households to increase precautionary savings, reduce spending, draw on long-term savings, such as superannuation, and delay bills or loan repayments," Oughton said.
However, it appears many households are "on the cliff's edge", with around 21% of households having less than $1,000 in savings.
The study also found that only one in three households could maintain their lifestyle for more than three months if they lost their source of income. Furthermore, nine in 10 workers think it’s unlikely that they’ll get a new job within two months of becoming unemployed.
"Financial comfort levels are up for now, but many households are on the cliff's edge. They've lost income, their jobs and entire livelihoods, their wafer-thin savings buffer is dwindling, and government support is the main action stopping them from falling over," Oughton said.
The federal government recently announced the extension of JobKeeper and JobSeeker payments.
Peter Koulizos, chairperson of the Property Investment Professionals of Australia, said the extension of the wage subsidy will also help the finances of many Australians affected by the outbreak. He said the tightening of JobKeeper eligibility criteria would mean that the people who really need support will be targeted.
"The extension, as well as the continuance of mortgage repayment pauses, will benefit homeowners, landlords and tenants who continue to need financial support over coming months," he said. "It also gives people time to breathe and prepare — rather than starting to panic about how to financially survive post-September."