Financial resilience improves with age but don’t count on it

In some rare good news for those getting on in life a new report into financial resilience suggests this important quality improves with age and highlights the role of experience.

The Financial Resilience in Australia report, from the NAB bank and the Centre for Social Impact, measures the concept which goes beyond financial literacy to measure our abilities to bounce back from adverse events.

It shows that 36% of Australian adults are financially secure but 64% face some level of financial stress or vulnerability—of those two million at high stress and 10 million at low stress.

Interestingly resilience is measured by four areas which can help or hinder your destiny with money of which financial literacy is only one small part of the four domains.

They are:  having economic resources such as savings; financial products such as access to credit or insurance; financial knowledge such as confidence to use services and social capital in terms of social support in times of crisis.

There are many lessons to be drawn from the research ( see here http://www.csi.edu.au/media/uploads/Financial_Resilience_in_Australia_-_Full_Report.pdf) particularly has how financial resilience scores appear to improve smoothly with age.

The 50-64 age group score highest with economic resources, financial product/ services and social capital with the 65+ group running close with them.

The FiftyUp cohort  are still well ahead in financial knowledge and behaviour but those who scored highly in this category are a definite minority at well under 20%.

In all age groups 48% have only a basic understanding of financial products and services with almost one in ten have no understanding at all.

In other findings 1 in 2 people follow a budget but a similar number have limited or no savings at all. On the upside 1 in 4 report seeking professional financial advice.

The lesson seems to be while age does help with your score there are many other factors such as location, country of birth, income, labour force status, education, housing and health which also count.

For those with a sunny disposition their good news is that people who are optimistic are more likely to do better in the resilience scale than those classified as neutral or pessimistic.

And those who are pessimists are more likely to be in severe or high financial stress so there might be a direct incentive in life to cheer up!