Financial counsellors needed in cost-of-living crisis

With the cost-of-living burden far reaching across society, financial counsellors are assisting new and emerging clientele experiencing financial strain, including higher income households.

Price increases to essential commodities including housing, groceries, petrol and utilities has fueled a cost of living crisis that has made the role of a financial counsellor imperative.

Serving those in financial hardship, a financial counsellor is a qualified professional who provides information, support and advocacy for individuals or families experiencing money challenges, debt or financial stress. Their role can include negotiating with lenders, organising hardship arrangements, referrals for emergency relief, and creating manageable budgets for their clients.

In 2023, the Financial Wellbeing Collective, the largest group of financial counsellors in Western Australia, provided one-on-one case support to nearly 6,000 people from the Perth metro area who were experiencing financial hardship, from across 12 partner organisations.

In doing so, the Financial Wellbeing Collective noted a huge increase in those who are employed, those in higher income brackets and those with mortgages reaching out for financial counselling assistance.

Financial Wellbeing Collective general manager Helena Jakupovic said demographic groups who were previously financially secure are now impacted.

“In the last two years we have experienced a dynamic shift in clients reaching out for help because of cost-of-living pressures. In this time, we have had increases from middle and higher household income brackets accessing our services. In fact, since 2021 we have had a 60 per cent increase in clients with an annual household income exceeding $100k needing financial counselling,” Ms Jakupovic said.

Latest income data reported by the Australian Bureau of Statistics has the median Western Australian annual household income at $94,380.

The Financial Wellbeing Collective has experienced a 20 per cent increase in double income employed families seeking the services of their financial counsellors since 2021.

“Our data paints a picture that tells us the average Western Australian household is under extreme financial strain in the current economic environment,” Ms Jakupovic said.

Housing availability and affordability is having an enormous impact on household budgets. The Australian Bureau of Statistics deems housing stress to occur when greater than 30 per cent of the household income goes towards housing costs.

Ms Jakupovic said housing stress has spiked among clients, with 38 per cent of their income going to housing costs, up from 32 per cent in 2021.

“With the current housing shortage our clients are prioritising their rent and mortgage payments at the detriment of other living essentials such as food, utilities and fuel. Sadly, many of the people we see are having to make very hard decisions simply to keep a roof over their head.”

One client who faced losing their home in 2023 spoke to the value the assistance of a financial counsellor had for their family.

“Since I engaged the financial counsellor, the bank has been considerate with us especially with what we have been through. There was a time I was told we would lose our house but the financial counsellor was able to change this situation. I feel like there is someone who will help us especially in times of desperation.”

Unexpected financial hardship 

Ronald McDonald House Charities WA's annual Impact Report (2022) highlights the financial impact of having to deal with an unexpected illness or injury of a child during an emotionally difficult time.

"Don’t know what we would have done if we couldn’t stay at Ronald McDonald House Charities WA. Would have been completely mentally and financially ruined," one parent said.

"Financially it would have been very difficult if we couldn’t stay at Ronald McDonald House Charities WA… I don’t like to think about it," another parent said.

73 per cent of surveyed participants said their family's financial wellbeing would have been "stressful" if they were not able to stay at Ronald McDonald House Charities WA.

Between 2021 to 2022, financial wellbeing was elevated to be an equal, if not greater struggle for families, the report showed. Families entered Ronald McDonald House with a much lower financial wellbeing than the previous year.

Many families mentioned how the meals provided by Ronald McDonald House Charities WA were a key help financially, potentially linked to the increase in cost of living and growing inflation that occurred during the year. Ronald McDonald House Charities WA also had a higher number of long-term families staying in the house than normal due to COVID-19.

"Staying at the House was a huge financial help, particularly as breakfast and dinner is covered,” one parent said.

Free, independent service

Financial counselling is a free and independent service underpinned by government funding.

Ms Jakupovic said the commitment and support from the Department of Communities has been essential to delivering the financial counselling service.

The Financial Wellbeing Collective is powered by 12 partner organisations, including Anglicare WA and Uniting WA, who are united to reduce the drivers and impacts of financial hardship in the Western Australian community.

If you’re experiencing financial hardship, please reach out to thefwc.org.au.