The Guardian • Issue #2086

How financial crisis hits lower income families

  • The Guardian
  • Issue #2086
Silhouette of family.

Photo: Eric Ward – (CC BY-SA 2.0)

New research by the Brotherhood of St. Laurence (BSL) has shed light on the compounding financial crises impacting lower income households and their economic security.

The study interviewed low to middle-income people across Victoria who were then asked to complete detailed financial diaries over a 10 week period. The research examined how the cost-of-living crisis coupled with the lingering effects of the pandemic has collided with the long-term drivers of financial stress.

To better understand financial stress in times of crisis, the study analysed income, credit and debt, day to day money management, and subjective feelings of financial wellbeing.

The research shows that people trapped in poverty and insecurity are unable to budget their way out of financial crisis, despite their best efforts. The impact of these shocks on the most vulnerable can be viewed as an ongoing crisis that has been decades in the making.

The study found that housing insecurity was common among participants, with some living in fear of losing their homes and others having to live in unsuitable accommodation at a significant emotional and physical cost. Almost half of the renters in the study had been unable to pay rent on time in the past 12 months.

Low and uncertain incomes, resulting from low wages, unpredictable work hours, unreliable child support and inadequate social security, created significant stress for participants, leaving families struggling to make ends meet.

Making ends meet also found that:

  • Over the 10-week survey period, 27 of 43 participants reported borrowing money or delaying paying a bill
  • Over half of those employed reported that their income varied at least once during the 10-week survey period
  • Income support payments have not kept up with the rising cost of essentials, leaving recipients struggling to afford the basics, cutting back on food or heating, rationing medication or taking on debt
  • Complex requirements and confusing administrative arrangements when accessing social security payments lead to confusion and the risk of debts for many participants.

BSL is calling for bold and meaningful policy changes to ensure that the foundations of economic security – affordable housing, decent work and a fair and adequate social safety net – enable all people in Australia to live with security and dignity.

“This research highlights the daily battle low and middle-income families face to try and make ends meet, often to the detriment of their mental and physical health,” said Dr Dina Bowman lead author of the Making ends meet report.

“The cost-of-living crisis coupled with the aftershocks of the pandemic has caused a financial disaster for our most vulnerable that has been decades in the making. Now is the time for bold and urgent policy reform to ensure support and change for the people that need it most,” she said.

Brotherhood of St. Laurence (edited)

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