It's no secret Australians love a bit of bank bashing.
The big four ASX banks – Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) – are probably amongst the least trusted companies in Australia. The 2018 Royal Commission definitely didn't help the sector's reputation either.
But according to a report by the University of Melbourne, ill feelings towards the banks is also contributing to Aussies' financial happiness.
According to the report, almost 1 in 3 Australians are dissatisfied with their financial situation. And the most common problem identified was a "lack of trust in financial institutions and advisors".
This, of course, shouldn't be too surprising for the ASX financials sector. The Royal Commission two years ago revealed systemic rip-offs, mischarging for services and a myriad of other 'questionable' practises that resulted in leadership changes at AMP Limited (ASX: AMP), Commonwealth Bank, NAB and Westpac.
The report also stated that 54% of Australians have experienced 'issues' with their financial service providers in the last five years.
Or course, it doesn't help that 77% of Australians have 'regrets' when it comes to their finances. The top three regrets (according to the study) all related to behaviours such as not saving, not investing and not budgeting, whilst the fourth regret was 'not learning enough about money and investing'.
Perhaps the most shocking statistic was how unprepared most Aussies are for financial shocks. 1 in 5 Australians have less than $1,000 in savings and 1 in 2 have less than $10,000.
Having such a low level of cash in the bank (or perhaps under the mattress) means that too many Australians are vulnerable to a 'shock' (it might be an unexpected medical emergency, divorce or just crashing the car), which in turn often leads to taking out debt to tide things over.
Once you are on the debt 'treadmill', it can be very hard to get off, which means that at least 1 in 5 Aussies are in the financial 'danger zone'.
What can we learn from this report?
Too many people regret not investing sooner when it is too late to take full advantage of the wonders of compound interest. So if you haven't started investing, hop to it!
Otherwise, I think it's worth reminding ourselves of the peace of mind that having an 'emergency fund' of liquid cash can bring. You would be amazed at how much comfort having a few months of living expenses sitting in the bank can bring (even with a paltry interest rate).
And lastly, be vigilant with your bank. Banks are not charities and at best your relationship with your bank will be mutually beneficial. But don't let it descend to less than that. So shop around and make the banks work for you, rather than the other way around!
