Index of Consumer Confidence Shows Sharp Fall
Sydney, Nov 19, 2014 AEST (ABN Newswire) - The MasterCard (
NYSE:MA) Index of Consumer Confidence has found that consumer confidence has fallen sharply, from 49.2 in the first half of 2014, to 37.2 in this half. The survey, which asks people about their expectations for the next six months, found that more than 1 in 3 Australians expect the economy and unemployment to get worse over the coming months.
According to the research, consumers are responding by intending to save more (39% plan to do so); investing in their education and employability - 1 in 3 plan to attend an educational course; and looking for bargains: 1 in 4 look for coupon deals before choosing a restaurant. This research, conducted in the third quarter, is interesting in the lead-up to the main Christmas shopping season.
"The uncertainty following the Federal Budget and the unpredictable unemployment rate appears to have spooked consumers and made them more pessimistic about the latter half of 2014. Against this background, Australians are being conscious about how they save and spend their money, and how employable they are," said Andrew Cartwright, MasterCard Australia Country Manager and SVP.
Nicole Pedersen-McKinnon, founder of independent website TheMoneyMentorWay.com, said the findings represented a significant shift in Australian attitudes towards money and its management.
"'She'll be right' appears to be morphing into 'she'll be responsible' when it comes to money - and that's no bad thing," Pedersen-McKinnon said.
"Australians en masse are seeking to safeguard their finances by increasing savings buffers and securing their income either from their current job or - as employment prospects in some industries wane - in a new field entirely."
Meanwhile, Australians are cutting back on spending with one third of respondents intending to spend less on luxury items than in the previous 12 months.
"Where we are still spending, we are demanding bigger bang for our buck," Pedersen-McKinnon said.
"More than three quarters of us now shop online for cut-price luxury items. And discount coupons (24%), online reviews (39%) and word of mouth (41%) heavily influence our restaurant choices, suggesting a growing aversion to shelling out for a disappointing experience.
"Economic and political conditions seem to have heralded the era of the 'Austere Aussie'."
But this more conservative money manager does not appear willing to compromise lifestyle. For example, 17 percent of respondents reported they would eat out more in the next six months, just spending less when they did so (19% of respondents).
The average amount Australians currently spend eating out every month is $154, with food courts and fast food establishments accounting for nearly half of their easting out experiences. The remainder is made up of mid-range food outlets, pubs/bars and fine dining restaurants.
But larger lifestyle rewards down the track are motivating Australians' increased saving. Those who intend saving either the same or more in the next six months (87%) are doing so to:
1. buy or renovate a property (31%);
2. fund an international holiday (31%);
3. purchase a car (20%); or
4. buy electronic gadgets (19%).
Australians would use any bonus income to pay off debt (34%) and save (25%) rather than take an overseas holiday (20%).
"It's tremendous that we are looking to the future and getting smart about our money. It's an attitude change that can change lives, affording you options and opportunities," Pedersen-McKinnon said.
Pedersen-McKinnon's tips for Australians to shore up their finances are:
1. Build an emergency fund of preferably six months' salary - "Six months provides a good buffer against job loss, illness and other unexpected events."
2. Take advantage of product discounting on everything from mortgages to electricity - "Cutting your so-called fixed costs is the easiest and best way to boost your bottom line."
3. Make sure you are adequately paid and consider ways to earn extra income such as monetising a hobby or talent - "Forget talk there will be no pay rises for two years; the outlook is industry by industry, company by company and employee by employee. Ask the question."
4. Target the future - "You need strong motivation to resist instant gratification so make your lifestyle goals irresistible."
MasterCard Money Management Index
The Index is based on a survey conducted between July 2014 and August 2014 on 1207 respondents aged 18 - 64 across Australia.
About MasterCard Inc
MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.
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