Gfc Teaches Australians A Few Valuable Lessons

GFC Teaches Australians A Few Valuable Lessons: Results From The Latest Citi Fin-Q Survey

8 January 2010

* 66 percent are paying more attention to finances than ever before
* 57 percent feel they have a 'good' or 'very good' understanding about personal finance
* 84 percent believe personal finance should be part of the school curriculum
* Biggest financial concern of Australians is to rebuild savings

While it's a long way from any classroom, the dominance of the global financial crisis (GFC) in our daily lives over the past year, appears to have provided many with an education in personal finance.

The third annual Citi Fin-Q survey reveals that 66 percent of Australians are paying more attention to finances than ever before and 57 percent feel they have a `good' or 'very good' understanding about money management and personal finance up 17 percent since the question was previously asked in 2007.

Citi's research shows that lessons learned from the GFC could also be linked to an increase in the average Australian Citi Fin-Q score which rose significantly from 44.1 in 2008 to 48.4 in 2009. The Citi Fin-Q score is designed to measure the financial well-being of consumers and their preparedness to respond to short, medium and long-term financial challenges.

And while the financial prowess of adults may be on the rise, 84 percent of Australians also believe that personal finance should be a mandatory part of the school curriculum which means future generations may be learning about the GFC in a classroom.

Andrew de Graaff from Citibank Wealth Management said one of the outcomes of the GFC was a practical education in personal finance for many Australians. "I think awareness of our own personal financial situations has definitely jumped. The spotlight was well and truly on financial matters in 2009. You couldn't escape reading or hearing about it so it makes sense that some level of education has occurred.

"The majority of people have been personally affected by the GFC and have had to address their financial situations in some way. That hands-on involvement is a powerful teacher and a great motivator to learn."

More evidence of learning includes the fact 36 percent of Australians try to save something every pay up from 30 percent last year and 58 percent say they pay off their full credit card balance each month up from 30 percent last year. There has also been a big increase in the number of people who say they would have a `good' idea of how to invest six months' salary now 55 percent, up from 30 percent in 2008.

Australians may have emerged wiser from the GFC but the events of the last year did take their toll.

* 59 percent of Australians say their finances were affected by the GFC
* 52 percent say their retirement savings suffered serious losses
* 19 percent think they are "well behind where they should be as a result of the GFC" and another 42 percent say they are "a little behind"
* 41 percent have made a lot of tough changes to their finances in the past year
* 64 percent cut back on non-essential spending in the past year
* 38 percent are now spending much less in an average month compared to 12 mths ago

Mr de Graaff commented: "On a basic level, many people have had to be tough with their finances over the past year and show more discipline in terms of budgeting. Others had to make more complex investment decisions or review their finances entirely.

"In terms of action taken, our survey shows a renewed enthusiasm in saving with 39 percent of Australians saying they are saving a little or a lot more than a year ago. Twenty percent also say they are investing a little or a lot more than a year ago."

On another positive note, most Australians feel we've turned the corner and the GFC is behind us. Sixty one percent are confident in Australia's economic future, up 20 percent from a year ago.

"Whether the lessons of the GFC will be forgotten remains to be seen but at the moment people do seem to be more proactive in terms of their finances. For what is often considered a dull, boring topic, interest levels are definitely up. It's a shame that it took something as significant as a global financial crisis to spark more interest," Mr de Graaff said.

About the Citi Fin-Q Survey
Most of us know that IQ stands for Intelligence Quotient. The Citi Fin-Q Survey was designed to measure the Financial Quotient (Fin-Q Score) or financial well-being of consumers. As part of this survey, Citi scored respondents on 11 different questions closely related to financial well-being with a maximum possible score of 100.

The Citi Fin-Q Survey was conducted by CXC Research and involved surveying 5,200 people across 11 countries. The results we share with you today are taken from a representative sample of 500 Australian adults, 18 years of age or older who we surveyed between 6-12 October 2009.

Media enquiries:
Leila Dean: T: (02) 8225 1223 M: 0404 509 894 [email protected]

Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Banamex, and Nikko. Additional information may be found at www.citigroup.com or www.citi.com.

Any advice is general advice only. It was prepared without taking into account your objectives, financial situation or needs and because of that, before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives and personal circumstances. Citigroup Pty Limited ABN 88 004 325 080 holds an Australian Financial Services Licence (AFSL) No. 238098.

SOURCE: Citibank