Most Australian households would struggle to pay over $2,000 for unexpected but necessary services like urgent home and vehicle repairs or dental work, according to a new Australian Household Threshold report. The report – based on a survey of over 1,000 Aussies by Antenna Strategic Insights for payments and funding solutions firm QuickFee – found that an unexpected bill above $1,500 would stretch the budget for 45% of Australian households.
An additional $500 would place pressure on around 60% of households, who would struggle to pay a surprise bill of over $2,000. And when it came to an unexpected $5,000 bill, only a quarter (28%) would be able to meet it without stretching their household budget.
The report also found that over half of homeowners (62%) were worried about their ability to pay an unexpected bill, with around a third significantly worried. When it came to actually paying these bills, the survey found the majority of Aussies (52%) would turn to their credit card to meet large, unexpected costs, with BNPL and personal loans other methods noted.
What were the other insights of the study?
Other findings of the report include:
- More than a third of Australian homeowners incur interest on their credit cards.
- One in five Australian homeowners often forgo household needs as a result of a lack of sufficient disposable cash.
- 53% would like the option of an instalments style payments solution for unexpected, expensive and necessary purchases:
- Those in the 18-34 year and 35-54 year age brackets were the most inclined to use such a solution (73% and 62% of each age group respectively).
- Key services Australians would like to be able to use a BNPL-style payment solution for are dentistry and auto repairs (29% each), followed by home improvements (25%), healthcare (21%), veterinary services (20%), funerals (19%) and home services (11%).
What do the findings of the report indicate?
Bruce Coombes, Managing Director of QuickFee Australia, said the report showed the financial pressures impacting households despite reported increases in household savings during lockdowns, and the need for flexible methods to help manage unexpected costs.
“Many Australians are facing financial stress, worrying about large and unexpected bills, and thinking about the need for more flexible payment options,” Bruce commented.
“While there are payment methods that provide consumers with availability to meet their wants such as new clothes, there is also a significant need for solutions that cover higher value unexpected and essential costs and help mitigate their impact on household budgets.”
“To help address these issues, we are now offering a custom solution for franchise businesses providing homeowner services, allowing consumers to access flexible payment plans over four, six, nine or 12 interest-free instalments,” Bruce further commented.
Jayson Walker, an experienced financial advice professional and CEO of Tribel Advisory, said: “Financial stress is toxic and can ruin lives, and unexpected bills are definitely a contributing factor to that. Sometimes things happen that cost money, so it’s best for people to educate themselves about options and budget as best they can, even in the face of the unknown.”
“Paying by instalments makes sense because you are avoiding handing over a lump sum in the first instance, and benefitting from the predictability of the monthly payments that follow.”
The Australian Household Threshold report can be accessed here.
