Many are worried, but still won’t save

AUSSIES are worried about unexpected financial hurdles, but not doing anything about it, new research has shown.

A survey of more than 1000 Australians, commissioned by Comparethemarket.com.au, revealed that one in four Australian adults fear redundancy, but one-third of households do not save money for unexpected events.

Of those that did stash cash for a rainy day, 44 per cent could only put aside up to $200 a month, while 27 per cent saved between $200 and $500.

Comparethemarket.com.au spokeswoman Abigail Koch said that while Australians knew they should be saving, many were disengaged with their future.

“Financial engagement is low, given the huge sums of money, the debt that households are in,” Ms Koch said. “Wages are flat and the willingness of banks to lend has left people with huge mortgages and rising costs of living. They are managing at the moment, in a low interest rate environment, but that could be a ticking time bomb.”

ABS figures show the average household debt in Australia increased 91 per cent over the 13 years to 2016, which coincides with similar growth in house prices. Now, Australians are more vulnerable than ever before if they were to lose their jobs, but while this is a fear for many, a large number remain disengaged or unaware about income protection insurance.

Just 55 per cent of survey respondents knew it covered being out of work due to injury sustained outside the workplace – rather than just being injured at work.

Only 52 per cent knew it covered critical illness sustained outside of work, while a worrying 35 per cent believed redundancy cover was standard inclusion, when it is in fact quite uncommon.

“Income protection insurance can provide you with up to 75 per cent of your wage for a set period of time you’re out of work due to illness or injury,” Ms Koch said.