With household debt at a record high, even slight interest rate rises can push family budgets to breaking point. Wages have come to a standstill, and almost 273,000 Victorians aren’t getting as much work as they need. Compared to 2017, we are less comfortable our incomes can pay for essentials like housing, energy and food.
For people relying on income support it is extremely difficult to make ends meet, with payments like Newstart and Youth Allowance set below the poverty line.
And because of the mismatch between income and expenses, we’re running down savings to pay for everyday living costs. The household savings rate has been steadily falling for some years and is now very low, at 1 per cent of household income. Cash buffers are being whittled away and many people will reach a point where they have no savings left to draw from.
In this environment, investing in more financial counsellors is a ‘no-brainer’. Financial counsellors help people deal with rental and mortgage stress, energy hardship, debt problems, and the financial effects of family violence, health issues and job loss.
They are experts at early intervention, preventing financial struggles snowballing into much larger and costlier problems. They help families to keep their homes when people become sick and less able to work, and help women live well after leaving a violent partner. They get debts under control and avoid bankruptcy, and free people from unaffordable, exploitative consumer deals without the need for costly legal action.
Financial counsellors come into their own when helping people avoid financial predators. Without free, independent financial counselling, people are more likely to be fleeced by payday lenders and ‘debt vulture’ services that claim to alleviate debt burdens but in fact worsen financial stress. Properly funded and advertised, financial counsellors are one of the best ways to disrupt the spread of predatory credit and debt advice firms.
Many Victorians are likely to benefit from financial counselling at some point in their lives. We’re now under significant pressure to be ‘good consumers’ and navigate complex markets of credit providers, insurers, energy retailers, telecommunications and consumer goods. Financial issues often crop up at major stages of the life course, such as undertaking education, getting (or losing) a job, having children, and managing in older age. Financial counsellors are on our side as we deal with these challenges, and can be a fundamental ingredient in a good life.
Victoria needs at least another 90 financial counsellors across the state, to spread these benefits further and better support Victorians in financial distress. It’s an opportune time for the Victorian Government to make this investment. Ramping up services now will prevent big problems down the track, like housing loss and homelessness. For many Victorian families, a financial counsellor might be the difference between staying afloat and going under.