UBank’s third annual Know Your Numbers Index1 reveals Australians don’t know key financial numbers as 86% of Australians don’t know their monthly expenses.
New research from Australia’s leading digital bank, UBank2, reveals Australians still don’t know key financial numbers in their lives and could be losing thousands of dollars each year as a result.
For the first time, UBank’s annual Know Your Numbers Index looked at Australians’ knowledge of their monthly household and entertainment expenses, with a large number admitting they don’t know how much they’re spending.
The most common reason given as to why people don’t know their monthly expenses accurately is that it’s too hard to calculate the expenditure.
“The Know Your Numbers Index found 86% of Australians are unaware of monthly expenses, which can cause financial problems over time.”
“While there’ll always be some costs we can’t plan for, it’s important budgets are created and stuck to, to minimise potential stress in the future,” said Hatton.
This year, the Know Your Numbers Index looked at how many Australians were using financial management and budgeting tools to help take control of their finances.
The research uncovered only 28% of Australians actively use financial management/budgeting tools. Additionally, 1 in 3 (31%) say they have not used any, but think it would be a good move.
“With so many numbers to monitor and keep track of, it’s no surprise people are feeling overwhelmed, even when it comes to simple financial tasks like budgeting. Financial management tools and budgeting apps are a great way for people to get on top of their money and feel in control of their finances,” said Hatton.
“The UBank app lays the foundation for simpler, better and smarter ways to manage money and is about to get even better, with an exciting new update coming soon. Watch this space!”
The research also found 59% of Australians admit their current financial situation causes them stress or loss of sleep and nearly half of millennials (44%) constantly worry about their financial future.
“With the latest data from the Bureau of Statistics uncovering the cost of living in Australia rose 2% last year and is the strongest pace growth we’ve experienced in 3.5 years, it’s never been more important to know your numbers,” said Hatton.
“Having your finances sorted is an important part of maintaining a balanced lifestyle and, unfortunately, too many Australians are experiencing the effects of not understanding their finances,” said Hatton.
Worryingly, only 1 in 5 Australians (20%) say they have full control of their finances.
As per previous years, the Know Your Numbers Index uncovered how many Australians accurately know their home loan rate, with an astounding 82% admitting they don’t know their exact home loan rate, down from 85% last year.
“While there was a slight improvement on last year, there are still too many Aussies out there who don’t know their mortgage rate,” said Hatton.
“We encourage people to do their research and stay on top of their mortgage rate as thousands of dollars can be saved by simply understanding where the best offers are and refinancing,” said Hatton.
“Australians also struggle to remember other key financial numbers in their lives. When it comes to credit card debt, only 1 in 5 cardholders (22%) accurately know their debt and 5% couldn’t say how much they owe.
“There are lots of things that can be done to improve your financial understanding,” concluded Hatton.
“It can be as simple as setting a budget and sticking to it. For mortgage holders, it can start by choosing a home loan fitting your personal needs. At UBank, we have a number of attractive rates, so some simple homework in knowing your current rate and researching what’s out there can go a long way. It’s amazing what affect taking control of your finances can have on your overall happiness and well-being,” said Hatton.
Ms Hatton says home owners currently paying 4.19% p.a. on a 30-year, $400,000 home loan could end up paying more than $41,000 more than they need to. If they were on UBank's low Owner Occupier P&I variable rate of 3.69% p.a. instead, they could save more than $1,350 each year.
1 UBank Know Your Number Index data conducted and compiled by Galaxy Research of 1,015 Australians.
2 UBank was awarded Best Online Bank 2017 in November 2017 by Mozo.