Households most likely to experience financial stress are single parent families and single non-elderly individuals, while older couples are least likely to experience stress.
These are among the findings on financial stress in the Melbourne Institute’s latest Household, Income and Labour Dynamics in Australia (HILDA) Survey. The most recent survey data in the report is for 2021.
More than 25 per cent of single parent households reported experiencing two or more indicators of financial stress. The proportion of this group experiencing stress was over 40 per cent in 2001 and then declined steadily until 2008. Prevalence has been steady since then.
Among other household types, long-term prevalence has been steady. The latest data show that among non-elderly single person households the proportion experiencing stress is between 15 and 20 per cent.
Fewer than 5 per cent of older couples experience financial stress. The report said this may reflect low housing costs, sources of wealth other than housing and relatively low expenditure needs.
In its questionnaire, the survey includes seven measures of stress and respondents are asked to indicate which of the seven have occurred. They include: could not pay electricity, gas or telephone bill on time; could not pay mortgage or rent on time; pawned or sold something; went without meals; was unable to heat home; asked for financial help from friends or family, asked for help from welfare or community organisations.
“Could not pay bills on time” and “asked for financial help from friends or family” have consistently been the most common responses over time, followed by “could not pay mortgage or rent on time”. In the most recent survey, the proportion of people reporting they could not pay bills or asked family or friends for help was around 10 per cent.
The least common responses were “was unable to heat home” and “went without meals”, at around 4 per cent.
A consistent pattern for all indicators of financial stress over the 20 years to 2021 is that prevalence rates declined between 2001 and 2008 and then increased until 2011. Between 2011 and 2017, the prevalence of each indicator remained steady or declined a little.
Between 2017 and 2020, there was some divergence. There was a sharp drop in the prevalence of some indicators, such as asking friends or family for help, but a pickup in people asking welfare and community groups for help.
The survey also looked at housing stress, where housing costs are high relative to income. The Melbourne Institute’s measure is housing costs of more than 30 per cent of income and where the household is in the bottom 40 per cent of income distribution.
Among all respondents, housing stress was highest in 2011, 2012 and 2018, when it was above 10 per cent. It fell an all-time low of 7.3 per cent between 2018 and 2021. The report said housing stress is likely to have increased since 2021, when the most recent survey was conducted.
As with financial stress, single parent families report the highest prevalence of housing stress. It is highest for renters.