A new research report, Financial Resilience in Australia, recently released by Centre for Social Impact in partnership with NAB identifies four key components that contribute to financial resilience: economic resources, financial products and services, financial knowledge and behaviour, and social capital. This research helps our microfinance workers by offering further understanding of preventative actions and a more complete picture of the services and supports people need to achieve financial resilience and therefore, wellbeing.
While we have always focused on supporting our clients to move away from financial crisis and financial hardship towards financial stability, what we refer to as ‘economic mobility’, we now have more understanding of what is required to prevent them from sliding back into a financial crisis or hardship situation. As our experience has shown, these setbacks often occur when people are faced with financial shocks, which can range from an essential household item breaking or a larger than expected utility bill to significant shocks such as loss of employment or a relationship breakdown.
Preventative actions to help keep clients’ financial situation from worsening include encouraging people to build a savings buffer, promoting the importance of social connections with friends/family and community support services, and continuing to develop peoples’ financial knowledge and behaviours, which was identified as low across Australia regardless of a person’s access to financial products and services.
This research validates what we have always known intuitively, and suggests new areas for us to consider:
the human connectedness and personal support we offer through our daily work is an important preventative measure. While women were identified as having high levels of social capital, we need to find new ways to help improve social connectedness for men.
the financial support we offer is vital but only a part of the overall scope of needs for individuals to be financially resilient – clients also require health, education, employment, social and other supports. We should consider ways in which our services can reinforce other service delivery options so that clients get more holistic support. For example, exploring the opportunity for the No Interest Loan Scheme (NILS) to be offered alongside healthcare, childcare, family services, education, employment, or housing support.
We welcome this shift in language from exclusion to resilience, which broadens our scope of understanding, yet we should also be aware that the research identified 18.3 per cent of Australian adults are fully or severely financially excluded – this statistic has worsened in the last two years, which indicates that our services are more important than ever. While we are reaching the most vulnerable groups of people with low income, employment, education and housing outcomes, we are only addressing a fraction of the overall need.
Lauren Thomas is the Manager of Program Design and Advisory Services at Good Shepherd Microfinance.
 Muir, K, Reeve, R, Connolly C, Marjolin A, Salignac F and Ho K (2016) Financial Resilience in Australia 2015, Centre for Social Impact (CSI) – University of New South Wales, for National Australia Bank.