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Are you financially fit?

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It’s not our waistlines on the chopping block of late but the fat in our budgets, according to a recent Bankwest report.

Research from Bankwest has found almost a third of Australians are financially unfit, an increase of three per cent from the same time last year. Surprisingly, this is despite the fact 48 per cent of households have become more conservative with spending over the year.

The Bankwest Financial Fitness Index, the third annual report commissioned by the bank, found that 31 per cent of Australians fit into the ‘financially unfit’ category, meaning they have little to no savings, high housing costs compared to income, too little insurance and few assets to their name.

“What we are seeing is Australians are becoming more aware of their finances and are making a conscious effort to reduce their debt levels and curb their spending,” says Vittoria Shortt, Bankwest Retail chief executive. “Whilst the results show more than half of Australians have borderline financial fitness, there are still a significant number of people who are not in a strong position financially.”

According to the report, only 17 per cent of Australians are classified as financially fit, compared with last year’s 22 per cent, with rising energy and grocery costs cited as the main reason.

Further, the report found that men have a higher likelihood of financial stability than women. Twenty-two per cent of Australian men have a sizeable asset base, low housing-cost-to-income ratio and have financial security for the future, compared to 11 per cent of women. Thirty-nine per cent of women were classified as financially unfit, compared with 23 per cent of men.

“Women have bit hit harder than men in the past year with eight per cent more women becoming financially unfit over the 12-month period,” says Shortt. "This may be due to the fact that, on average, women have lower incomes than men and many Australians have seen household costs increase over the year.”

The report also found that the spending patterns of Australians have changed over the past year. More than half of Australian families (56 per cent) have shifted their buying habits, while 55 per cent have taken action to reduce debt levels.

“More than half of households around the country have changed their spending patterns and taken concrete steps to reduce their levels of debt which shows that financial matters are front of mind,” says Shortt.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Tuesday, April 05, 2011

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