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Brokers waiting for customers to set up and live by a budget to accumulate a deposit may be kept waiting.
Despite the opportunity to buy a house and take steps in the right direction, our new research has revealed 67 per cent of consumers don’t have a budget.
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Our “State of the Household Budget” report examined the attitudes of Australians to managing their money and it resulted in interesting findings.
In addition to two-thirds of Australians not having a household budget, the research found over half are relying on bank account balances to guide their everyday financial decisions.
When we asked why they don’t budget, respondents were apathetic with two in five claiming they don’t care.
The remainder blamed a lack of time, said it was too hard, or the fact they were scared about what they might find!
What’s more, nearly one third know there are things they can do to better manage their money but keep putting it off.
Clearly many Aussies are struggling with basic financial management skills. This lack of budgeting limits their ability to accumulate for asset purchases, protect themselves against a “financial shock” such as job loss, and provide for their future.
The last 20 years have been good to Australians with unemployment and inflation relatively low, however this seems to be changing and people won’t know how to respond as they have lost the discipline and skills of budgeting. The introduction of comprehensive credit reporting also puts renewed emphasis on getting the financial house in order as missing bills can have a lasting impact on their credit file.
So what does this mean for brokers?
Rather than turning away customers who haven’t got a deposit, brokers have the opportunity to work with them and put steps in place to establish the required savings. It builds a relationship with the customer and could help with additional referrals. Think of it as part of your investment in business development.
There are a range of services available to help customers and brokers, like our own Managed Money which involves working with the client to examine their finances and manage their cash flow and budget (including actually paying bills).
Referring your clients to these services can limit the risk of them going elsewhere should they join a bank or builder’s first homebuyer savings scheme, or take longer than necessary to save a deposit. It’s also more affordable than financial planning and means you can accurately predict when these clients will be able to meet bank lending criteria.
In addition to budgeting, brokers need to make sure they are talking to existing clients about comprehensive credit reporting. It’s important they understand how their financial behaviour can impact their ability to refinance or secure a new mortgage in the future.
Yes, we need a greater focus on financial literacy in this country to shore up our personal finances but it also represents an opportunity for brokers. These discussions and value-add services can build trust and rapport with your client base as well as developing your pipeline.
