According to the Reserve Bank of Australia, most Australian households are holding up remarkably well under financial pressure.
Mortgage repayments are largely being met, household savings remain relatively strong, and the financial system continues to demonstrate resilience.
That’s encouraging news. But I wonder how many Australian families would describe their own financial circumstances in quite the same way.
Because there’s a difference between being financially resilient according to economic statistics and actually feeling financially secure.
THE NUMBERS DON’T TELL THE STORY
In its October Financial Stability Review, the Reserve Bank reported that most mortgage holders remain well placed to manage ongoing financial pressures. Despite higher interest rates and living costs, relatively few borrowers are falling seriously behind on their repayments.
From an economic perspective, that’s a positive outcome. But those stats cannot capture the family that has stopped taking holidays because the mortgage consumes more of their income.
The couple postponing renovations or delaying plans to start a family. Or the professional earning a healthy salary but working additional hours simply to maintain their lifestyle.
SURVIVING ISN’T THE SAME AS THRIVING
One of the challenges with measuring financial wellbeing is that we tend to focus on what people earn, own and owe. These are important measures, but they tell us relatively little about the quality of someone’s financial life.
A household might earn $250,000 annually, own a valuable property and hold substantial superannuation, yet still feel financially constrained every month.
Another household earning considerably less might have manageable commitments, meaningful savings and greater freedom to make choices about how they live.
Neither income nor net worth alone can explain the difference. What matters is the relationship between money, commitments and the life someone wants to lead.
FEELING CONSTRAINED
When nearly every dollar of income is already committed, even a strong financial position can feel restrictive.
There’s little room for unexpected expenses, changing circumstances or opportunities that weren’t anticipated.
Over time, that lack of flexibility can influence relationships, career decisions, family priorities and personal wellbeing.
And that’s why financial wellbeing deserves a broader definition than simply keeping up with the bills.
When the Reserve Bank meaures economic stability it provides useful insights.
Yet for Australian households it’s actually the personal feelings of financial wellbeing that matter the most.
