Aussies confident with finances despite economy fears

Three-quarters of Australian households believe their financial position will remain stable or improve this year, despite one third expecting the economy to worsen, according to the ING Direct Financial Wellbeing Index.

In 2011, 65 per cent of Australian households improved their financial position while 32 per cent fell behind. Among low-income households more than half saw their financial position deteriorate last year, the study found.

Only 22 per cent of households believed their financial wellbeing would worsen in 2012, with the key concerns being rising taxes and living costs (31 per cent), ability to maintain current lifestyle (18 per cent) and job security (17 per cent).

Households that improved their position in 2011 took key steps including building savings, reducing spending, getting a higher paying job, budgeting better, reducing home loan interest rates and paying off credit cards, according to ING Direct.

In the past year the percentage of Australians without a credit card grew from 11 per cent to 17 per cent, the study found.

The main hurdles for households whose financial positions deteriorated were the increasing costs of food, transport and power.

ING Direct chief executive Don Koch said that although Australians could not control the economy, they could take positive steps to strengthen their own finances, which many did in 2011.

"By building a buffer of savings, focusing on essential purchases and tightening household budgets, many Australians have shored up their financial position. It's not a case of bunkering down, it's just sensible."