Aussies unprepared for financial shocks
Australian households leave themselves vulnerable to financial shocks in the event of the main breadwinner losing their job despite record low interest rates, according to ING Direct.
Almost half of Australian households would only have enough income to last them less than three months if the main income earner lost their job, an online survey found.
The ING Direct Household Financial Fitness Test found two out of five (37 per cent) would only cope for one month or less if the main income earner lost their job.
It also found 45 per cent of the 1011 households surveyed would find it difficult to pay off an unexpected expense of $10,000 within three months, while 38 per cent would take six months or more to pay it off.
Executive director, customers, John Arnott, said the figures illustrate the importance of building savings that can protect households during unexpected events.
On the other hand, low interest rates have pushed the Financial Wellbeing Index to the highest level since tracking began in 2010, with 87 per cent saying they are confident in their ability to pay regular bills, while 95 per cent are comfortable with their mortgage.
"While low mortgage rates are good for households, homebuyers need to be mindful that rates can rise. Make sure you don't overcommit with your borrowings, so when rates eventually start to rise again you'll be in a strong position to be able to manage your finances and maintain your lifestyle," Arnott said.
AUTHOR
Malavika Santhebennur
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