Australians Are Stressing About Their Finances

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Weak wage growth set against rising costs has got Australians stressed about their money situation, credit information company Dun & Bradstreet has found.

Releasing its consumer financial stress index today, the credit company is forecasting financial stress in Australia to hit a new high this quarter as consumer sentiment remains fragile and household debt remains high.

The chart below shows the index rose to 18.4 points in the June quarter, its second highest level in more than four years.

ABS data shows household debt is at a 25 year high and inflation is now outstripping wages growth, Dun & Bradstreet director of consumer risk solutions, Steve Brown said.

“What’s particularly worrying, is that this rising stress is coming at a time when we have very low interest rates and a relatively steady jobs market,” he said.

“The important thing for businesses is to ensure they are properly screening and monitoring their customers to avoid those that are unlikely or unable to pay.”

Here’s the chart which compares actual and forecast consumer stress levels where a reading below zero indicates less financial stress, while a positive number indicates heightened stress.

Sunny Queensland is predicted to be the most financially stressed state in quarter three, jumping from 6.7 points in Q3 2013 to an expected 35.1 points.

According to Australian Financial Security Authority (AFSA) data the number of personal debt agreements in Queensland increased 33% in quarter two compared to the same period 12 months prior.

The state also has Australia’s second highest personal insolvency rates.

Residents in Victoria and NSW aren’t as financially stressed as their northern counterparts, quarter two data shows.

Dun & Bradford said population growth, construction activity and new jobs are helping the two states with the year-on-year financial stress index falling 27.7 points to 22.1 points in NSW, and 25.5 points to 18.5 points in Victoria.

But the outlook isn’t as relaxed with the graphic below showing all states and territories should expect stress to rise next quarter.

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