1 in 6 Aussie households under financial pressure – these are the worst-affected postcodes

A new study has found the number of Australian households under financial pressure has risen by 10% since the start of the pandemic, with approximately one in six now experiencing some form of financial pain. The data points to the suburbs and areas that are worst-affected, as well as the amount of pressure households are experiencing.

With rising inflation, an increasing lack of affordability in the housing market, low vacancy rates for rental properties, and the ongoing financial effects of both the COVID-19 pandemic and the devastating east coast floods, many Aussie households are feeling the pinch financially.

There could be even greater pressure on our finances down the line, with fears the war in Ukraine could send petrol prices soaring, and warnings that a hike in the official cash rate could send some homeowners into mortgage stress.

With these various financial challenges facing everyday Aussies, digital financial planning app Otivo, Australia’s first comprehensive fully compliant automated online financial advice platform,  undertook a study into households around the country, to find out how we are coping with the pressures of these recent and current events.

After surveying 52,000 households, Otivo found that 4.1 million Australians are currently experiencing some form of financial pressure, with those in WA feeling particular pain. So what does this mean, and which suburbs are the most heavily affected?

What does financial pressure look like for the average household?

A household under ‘financial pressure’ is one with little cash to spare after debts and household expenses are paid, meaning there is less of a financial buffer in the case of an emergency.

The study, which was conducted with Digital Finance Analytics (DFA), looked at how much money is coming into a household, compared with that household’s financial commitments. These financial commitments ranged from mortgages, to rent and debt repayments, through to such everyday expenses as food, petrol and childcare.

Debts such as home loans, personal loans and car loans were considered as a percentage of a household’s overall disposable income. The higher the ratio of debt to income, the less cash the household might have for an emergency, and therefore, the higher its financial pressure score. The study also found that financial pressure on a household is correlated to such things as:

• overspending
• poor budget management
• loss of employment
• health issues
• reduced government benefits
• relationship breakdowns, and
• drops in income.

Which states are feeling the most financial pressure?

According to Otivo’s data, households in Western Australia are experiencing a great deal of strain, with an average score of 38.9. On the other end of the scale, households in the ACT are experiencing the least amount of financial pressure in Australia, with a relatively low score of 8.2. State by state, the average financial pressure scores per household are as follows (ordered from least to most stressed):

1. ACT: 8.2
2. NSW: 16.3
3. Vic: 19.9
4. NT: 16.3
5. Tas: 20.6
6. Qld: 21.6
7. SA: 22.5
8. WA: 38.9

Which postcodes are feeling the most financial pressure?

Within each state and territory, Otivo’s research considered the postcodes experiencing the most financial stress. The data shows a mix of suburbs, with many rural households in states like Queensland and Victoria facing pressure, and by contrast, more urban areas such as Newport and Narrabeen in Sydney’s northern beaches also facing the strain.

Overall, the figures show that New South Wales has the highest overall number of households in financial pressure, with nearly 1.4 million households – approximately 17% – feeling the strain. While Western Australia has a smaller overall proportion of households under financial pressure (around 15.8%), households feeling the pressure there seem to be facing greater financial strain on average than people in other states.

The data for this study was collected in February 2022, shortly before the devastating floods that destroyed thousands of homes and businesses along the east coast, particularly in areas of South-East Queensland and the Northern Rivers area of New South Wales. It’s possible that if the survey were conducted again today, suburbs in these areas may record higher levels of financial distress than shown here. Nonetheless, the figures below still offer a fairly recent insight into the state of household financial stress around the country. State by state, the postcodes with the most financial stress according to Otivo’s data are:

The ACT

• Yarralumla (2600): financial stress score of 11
• Red Hill (2603): financial stress score of 11
• Narrabundah (2604): financial stress score of 10
• Crace (2911): financial stress score of 10
• Greenway (2900): financial stress score of 10

New South Wales

• Newport (2106): financial stress score of 24
• Scotland Island (2105): financial stress score of 23
• Narrabeen (2101): financial stress score of 21
• Cudal (2864): financial stress score of 21
• Wallendbeen (2588): financial stress score of 21

Northern Territory

• Bakewell (0832): financial stress score of 24
• Leanyer (0812): financial stress score of 23
• Marlow Lagoon (0830): financial stress score of 23
• Nakara (0810): financial stress score of 23
• Larrakeyah (0820): financial stress score of 21

Queensland

• Burketown (4830): financial stress score of 26
• Glenmorgan (4423): financial stress score of 26
• Bowenville (4404): financial stress score of 26
• Eungella (4757): financial stress score of 26
• Coral Sea (4741, near Mackay): financial stress score of 26

South Australia

• Glenunga (5064): financial stress score of 29
• St Peters (5069): financial stress score of 29
• Birkenhead (5015): financial stress score of 28
• Medindie (5081): financial stress score of 27
• Noarlunga Centre (5168): financial stress score of 27

Tasmania

• Highclere (7321): financial stress score of 24
• Bream Creek (7175): financial stress score of 24
• Dover (7117): financial stress score of 24
• Winnaleah (7265): financial stress score of 24
• Middleton (7163): financial stress score of 24

Victoria

• Mangalore (3663): financial stress score of 22
• Culgoa (3530): financial stress score of 22
• Speed (3488): financial stress score of 22
• Great Western (3374): financial stress score of 22
• Strathdownie (3312) financial stress score of 22

Western Australia

• South Tammin (6409): financial stress score of 46
• Marble Bar (6760): financial stress score of 46
• Dangin (6383): financial stress score of 46
• Morawa (6623): financial stress score of 46
• Buntine (6613): financial stress score of 46

What can you do if you’re under financial pressure?

Canstar finance expert Effie Zahos says that while there are things in life you can’t control – for instance, you generally can’t control whether you lose your job or unforeseen health issue cropping up – it’s important to focus on the factors you can control if you’re facing budgetary stress.

“Overspending and poor budget management are two things you can easily control,” says Effie.

Whether you’re currently experiencing financial stress or you’re concerned about the future and want to take measures to protect yourself from financial pressure, here are some tips from Effie that could help.

What can you do if you’re under budgetary stress right now?

“When it comes to financial stress, the most important thing is to identify the sources,” says Effie.

“Write them down the sources of stress, then narrow down the top ones. Once you highlight the sources of your financial issues, they become a bit more tangible. You can’t tackle everything in one go, but you can really focus on the real problem areas.”

Effie adds that if you’re facing a crisis situation with your finances, creating a ‘bare-bones budget’ may help.

“When you do a bare-bones budget, you keep the essentials, you keep only the things you need to survive on, and throw out everything else. You don’t need your streaming service subscriptions or your weekly hair appointment or whatever the case may be,” she says.

“A bare-bones budget just has the essentials – food, electricity, housing expenses. You channel the rest of the money that was going to other places back to those things. You may need to survive on that for a little while. It’s hard, it’s boring, it takes discipline, but it’s going to help give you that cash cushion that you need.”

What can you do to prepare for budgetary stress in future?

Even if you’re not under stress right now, you may be concerned about the effect that rising interest rates and similar pressures could have on your finances in future.

“As we’re moving towards a higher interest rate environment, you can do as much as you can now to prepare yourself,” says Effie.

“Don’t take on any more debt. If you do have debt, put some strategies in place to reduce it. Work out which source of debt you can tackle first and redirect your money to that pressure point.”

Effie says that even if it means making minimum repayments on other items for a time, taking care of your pressure points is important.

“It’s about relieving that pressure,” she says.

“You can even look into what you’re paying on your home loan, and ask if there’s a cheaper rate out there. Of course, the kind of home loan rate you can get will ultimately depend on your financial situation, but if you can get a better deal on your home loan, you may end up paying less and having cash to put in other areas. ”

What can you do if you’re in immediate need of financial help?

Effie says that if you need help, you should not be afraid to ask for it. The No-Interest Loan Scheme (NILS) exists to provide eligible individuals with interest-free loans of up to $1,500 to purchase essential goods. Similarly, you can ring the National Debt Helpline on 1800 007 007 to find out what assistance you may be eligible for. Effie says the helpline also has financial counsellors available, who can help you put together a budget if you’re unable to create one yourself and have never done it before.

Main image source: Wayhome Studio/Shutterstock.com.