Urbis Think Tank
New ME Bank report shows importance of assets in financial comfort
Property ownership helps make households comfortable
The ME Bank Financial Comfort Index released today shows that ownership of a property is a positive contributor to high levels of household financial comfort.
Household net worth has a marked impact on how comfortable households feel financially (the most important asset is super, followed by property). However, households with very high incomes had only slightly higher financial comfort than households with lower incomes.
So making money doesn’t make you comfortable, but having assets does.
While assets make households feel comfortable, the absence of debt doesn’t seem to have the same impact. “An average level of household income and a relatively moderate amount of debt supports financial comfort, but a significant amount of wealth provides assets to fall back on and allows a family to cope with sustained financial stress associated with unemployment, poor health or some other unexpected life event.”
Single parents the least realistic about their financial situation while retirees hold the assets.
The study also examined the relationship between households’ actual situation and how comfortable they felt. Single parents are the least realistic about their financial situation. 29% of single parents with younger children and 27% of single parents with older children overstimate their financial comfort compared with their actual situation.
The study revealed that reality for single parents with younger children is a far lower level of net worth ($79K) than the average household ($382K). In contrast, self-funded retirees have an average net worth of $1.57M. Even retirees with full or part government support have high net worth of $625K, which is well above the national average.