Australians’ financial comfort near record high despite the pandemic – but for how long?

In a surprise twist, the flood of government stimulus combined with financial actions of households in response to the COVID-19 pandemic has pushed the nation’s household financial comfort to a near-record high.

But troubling data raises serious questions about what will happen if government support is tapered too much and too soon.

Financial comfort index

These are the key findings of ME Bank’s Household Financial Comfort Report, a bi-annual survey which quantifies how comfortable Australian households feel about their financial situation. Recession Australia Note Money Economy Squeeze Tighten Save Saving Budget Cut 300x200

ME’s 18th survey showed Australian household financial comfort increased 3% to 5.76 (out of 10) in the past six months to June 2020 − just shy of its historical high of 5.78 recorded in December 2014.

Contrary to expectations, financial comfort has jumped the most among typically struggling cohorts – such as casual workers, the unemployed, low-income households and single parent households (though their comfort levels remain a great deal lower than the average household and higher-income Australians).

Almost all 11 measures that make up the Household Financial Comfort Index improved, notably ‘comfort with the ability to cope with a financial emergency’ (up 9% to 5.25, the best level on record) and ‘cash savings’ (up 8% to 5.48).

Financial comfort index

ME Bank’s Consulting Economist, Jeff Oughton, attributed the high financial comfort to a combination of prudent financial actions by households in response to the both the health and economic crisis, and unprecedented government support.

“Fear of COVID-19 and a very weak labour market triggered many households to increase precautionary savings, reduce spending, draw on long-term savings, such as superannuation, and delay bills or loan repayments,” he said.

“In June, 57% of households ‘spent less than they earned each month’ – up 8 percentage points to the highest level of households saving since the survey began nine years ago. However, paradoxically, this cautious behaviour and a lack of spending may cause a negative knock-on effect to the economy and a deeper recession.

“Government stimulus has bought some time and helped boost the financial resilience of Australian households for now. But a household savings cliff remains as government support tapers. Unless the economy gains momentum, tapering government support too soon could have disastrous consequences on the financial comfort of households,” said Mr Oughton.

Savings cliff and high underemployment point to households still on the brink

In June, only 32% of households indicated they could ‘maintain their lifestyle for more than three months if they lost their income’.

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Many households were already under pressure before COVID-19, particularly with low household income growth and cost of living concerns.

Around 21% of households have less than $1,000 in savings (on average, about $300 – significantly lower than the current JobSeeker fortnightly payment).

Of these households, only 3% reported they could maintain their current lifestyle for more than six months if they lost their incomes, and only 7% for more than three months (or when JobSeeker payments begin to taper).

A record number of workers reported that it would be ‘difficult to find a new job in two months if they become unemployed’ − up 10 points to a new survey record of 59%.

Notably almost 30% indicated it would be ‘very difficult’.

Furthermore, the proportion of part-time or casual workers seeking more hours jumped to 39%, compared to 27% six months ago.

On average, these workers would like an extra 18 hours per week, compared to 17 in December 2019.

“Financial comfort levels are up for now, but many households are on the cliff’s edge. They’ve lost income, their jobs and entire livelihoods, their wafer-thin savings buffer is dwindling, and government support is the main action stopping them from falling over,” Mr Oughton said.

“This survey shows that the financial consequences for households of this pandemic remain critical. Many eyes will be on what governments do in the final months of 2020 and into next year.”

Negative impact of COVID-19 on financial comfort

In other new ‘special’ questions, household were asked what impact COVID-19 had on their financial comfort (prior to government income payments and other available assistance and their own financial actions).

Around 34% of households reported to be ‘worse off’ from the pandemic, compared to 20% ‘better off’, while 46% reported ‘the same’ comfort despite the pandemic.

More Victorians reported to be ‘a lot worse off’ (11%) – the highest of any state or territory and fewer ‘a lot better off’ (5%) than other states.

Households were also asked the main reasons for a worsening or improved financial situation.

Households experiencing a ‘worsening financial situation’ cited ‘changes to employment arrangements and job security’ (33%), ‘changes to income’ (24%), and for the first time, ‘the impact of COVID-19’ (24%).

However, 8% of households specified ‘support from government’ as a reason for an improved financial situation, compared to only 1% in December 2019.

Support measures provide a safety net, especially for some Gen Zs and single parents

Households were also asked what assistance and actions they adopted in response to the pandemic.

Almost 40% of households have benefitted from at least one or more of these major government payments and other assistance and/or taken their own financial actions in response to the pandemic. By June:

Around 1 in 5 households tapped into one or both Federal government payment supports − specifically, JobKeeper (12%) and JobSeeker (9%). Across generations, Gen Z was the largest recipient of JobSeeker (20%) and the second largest of beneficiary of JobKeeper (14%) behind Gen X (18%).
12% dipped into their existing savings – rising to 27% among Gen Z.
8% accessed up to $10,000 of their superannuation – rising to 30% among Gen Z (around three times more than Gen Y and Gen X).

Many Gen Z’s also dipped into their existing savings, with 27% using this to tide them over financially compared to the national average (12%). Gen Z also requested rent reductions (15%) and delayed or deferred bills (26%) and loan repayments (11%).

Financial comfort

While the impact of the pandemic has been felt strongly by some in this generation, overall the financial comfort of Gen Z increased 4% during the past six months to June, and for young adults living at home this jumped by 13%.

“Gen Z actively took up a variety of support measures to bolster their financial resilience and in turn financial comfort during the first wave of the pandemic.

This is likely due to many being employed on a casual or part-time basis across COVID-19 affected industries such as retail, hospitality and tourism,” said Mr Oughton.

Across life stages, single parents reported the largest gain in comfort (up 13% to 5.04) – especially those dependent on government assistance – boosted by the introduction of free childcare as well as the increased income payments from government.

Key winners and losers in ME’s 18th Household Financial Comfort Report:

financial comfort

Many vulnerable Australians have so far seen an improvement in their financial comfort amid the health and economic crisis, due to their own prudent measures as well as government and other assistance.

However, the overall level of financial comfort of single parents, the unemployed, and households with low comfort and low savings remains well below the average Australian household.

For example, despite rising 9% to a record 3.49, the financial comfort of households with ‘low comfort’ remains a great deal lower than the comfort of the ‘average’ household (5.76) and much lower than households on six-figure incomes (6.37).


Single parents – greatest increase in financial comfort across households (up 13% to 5.04)
Households with ‘low comfort’ – record high comfort (up 9% to a still very low 3.49)
Households with low savings (<$1,000) or low annual income (<$40,000) – comfort increased by 19% to 4.19 and 18% to 5.15, respectively
Unemployed – comfort increased by 30% to 5.17
South Australian households – comfort hit a new high and sits above the largest states (up 13% to 5.90)
Baby Boomers, Gen Z and Gen Y – largest rises in comfort across generations.


Households with average ($75,000 to $100,000) and high (>$100,000) annual incomes – comfort decreased by 4% and 2% to 5.67 and 6.37, respectively
Gen X – the lowest level of financial comfort of the generations, unchanged at 5.35
Victorian households – comfort fell by 3% to 5.64
Part-time employed – comfort fell by 6% to 5.56.

The full copy of ME’s 18th Household Financial Comfort Report can be found at

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