Financial wellbeing

Financial Wellbeing


I’ve just spent a couple of hours going through the recent ANZ Survey of Financial Wellbeing (2018). It provides a snapshot of the financial wellbeing of the Australian and New Zealand population.

In doing so, the document provides a good entry point into understanding the concept of financial wellbeing, and has some tangible lessons to take from it about how to build financial wellbeing.


What is financial wellbeing?

Financial wellbeing is “the extent to which someone is able to meet all their current commitments and needs comfortably, and has the financial resilience to maintain this in the future”.

Not limited to simply ‘income’ or ‘savings’, financial wellbeing as a concept includes knowledge, experience, attitudes towards money, capability to engage in beneficial financial activities, opportunities to engage in beneficial financial activities and degree of comfort and control in being able to mange current and future financial situation.

The primary reason that financial wellbeing is not defined simply as amount of money is that people can report high levels of financial wellbeing at quite different levels of objective wealth.


Why is it important?

Our financial situation is inextricably intertwined with our individual and social wellbeing.

Objectively, money is required to purchase most goods and services, as well as important ‘experiences’ such as education and travel.

Thus, the extent to which we can surround ourselves with beauty, achieve our goals, pursue our purpose, and be in the world is at least partially governed by our financial situation.

Also, previous research has highlighted that ‘financial control’ is one of three key pillars of happiness and wellbeing. This is not so much about objective wealth, but the extent to which we feel we have control over our financial situation, that is, have the skills and confidence to manage our finances in a way that helps us achieve our goals.

Individuals who lack control over, and spend significant time worrying about their financial situation have lower productivity, wellbeing and health.


What did the survey show?

The primary goal of the survey was to give a snapshot of the financial wellbeing of Australians and New Zealanders.

Based on a financial wellbeing score out of 100, and consisting of multiple components, participants were divided into 4 groups.

24% fell into the “No Worries” group. This group, although not demonstrating dramatically higher incomes, had greater savings, slightly less debt, were more likely to own their own home, be in a partnership, to save regularly and rarely have to borrow for everyday expenses. This group really had no financial worries.

40% fell into the “Doing OK” group. This majority group generally depended on salary and wages for their incomes, had moderate savings and investments, and were generally comfortable/ confident about their financial situation.

23% fell into the “Getting By” group. For this group, cracks had started to show. Many described their financial situation as ‘bad’ and were not confident about their financial situation over the next 12 months. This group demonstrated below average scores for money confidence and belief in their ability to control their financial future. They were more likely to have below average or variable incomes, rely on goverment payments, have outstanding loans, and have had time off work because of illness or unemployment.

13% fell into the “Struggling” group. For this group, things were pretty dire. They struggled to meet committments, lacked financial control or confidence, and were much more likely to be single, separated/divorced, receiving a government payment, renting, unemployed, and suffer from a long-term health condition or disability. They had the lowest savings and limited financial literacy (i.e. the ability to make informed judgments and to take effective decisions regarding the use and management of money).


It’s not all about income

When I was a student, I didn’t have much money or savings and I suspect the same is the case for a lot of you who are reading this. In fact, by the time I finished my PhD, I had exhausted all my financial resources, but thankfully got a job relatively soon after.

There is no doubt that income is a significant predictor of financial wellbeing. The survey indicated that about 30% of the variance in financial wellbeing could be explained by ‘socio-economic status’ – essentially your overall financial situation. One of the strongest predictors of low financial wellbeing was having less than $1000 in savings.

But it isn’t all about income.

Financial wellbeing is also a ‘state of mind’ and the extent to which you commit to some core regular financial behaviours/habits. Financial wellbeing is as much about behaviour and attitude as it is objective resources. For example, many people can survive happily and confidently on a low income. In contrast many people with high incomes can be clueless about how to manage their finances.

In the survey, they found that 16% of the variance in financial wellbeing could be explained by psychological factors, specifically confidence in money management skills, and ‘locus of control’ (greater self-belief in ability to control own financial situation).

An incredible 45% of the variance in financial wellbeing was explained by financial behaviour – the things people do – namely active regular saving, and where possible not borrowing money for everyday expenses (buying a house almost always involves debt).


So how do I build financial wellbeing?

When you are a student, it can be very hard to build wealth, but it is a perfect time to start building financial knowledge and good habits.

Here are 3 places to start:

  1. Whilst financial knowledge (e.g. knowledge about different financial products and strategies) is only a relatively small predictor of financial wellbeing, it is an important and necessary starting point. Finding objective financial advice can be difficult because often it is provided by groups with a vested interest (e.g. banks). You might have heard from the Financial Services Royal Commission that banks haven’t been super great in providing good financial advice to customers. The best objective financial advice I have ever got has come from:
    1. Government sites like, and AND
    2. Independent financial advice individuals who have an established track record of not taking incentives from industry for their promotion of products –
  2. Financial knowledge is only effective if it is applied, that is, translated into specific financial behaviours/habits. The key behaviour/ habit changes from the report are:
    1. Regular, repeated savings. Doesn’t matter how much, just that you have some kind of regular savings strategy.
    2. Trying where absolutely possible to not use borrowing to pay for daily expenses (e.g. credit cards, payday loans). These can quickly build debt through crippling interest rates.
    3. Restrained spending. Now this might sound insulting when your spending is already limited as a student. Think of it more as “mindful spending”. Analyse your costs to see where you might be able to cut costs.
  3. If you are struggling financially (and this is very common in students, so don’t feel ashamed), talk to a financial counsellor. Start by seeing the financial counsellor here at Flinders. You can get advice, interest-free loans and food vouchers. Also remember there are other supports at the university for those struggling to make ends meet. These include the Flinders Market for cheap/free food, and Flinders Connect for information about course fees and charges.

Commit to these steps and you will start building financial confidence and self-efficacy (the belief that you can control your finances). These are incredibly valuable skills to learn at this stage of your life.


Other resources

The moneyminded website, built by ANZ looks OK. Be mindful of the connection with ANZ – not that the advice is bad – just that there will be some subtle pushes to use ANZ products via branding and perhaps ongoing  communication from ANZ (you have to register to use the program).



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