The Impact of Financial Counselling on Alleviating Financial Stress in Low Income Households: A National Australian Empirical Study

Abstract

In Australia financial counselling has emerged as an important component of policy responses to assist low income households and individuals in financial stress. However, the evidence on its effectiveness in alleviating or resolving debt-related issues is patchy. This article contributes much-needed empirical evidence on its impact on low income households and presents the results of a recent national study of financial counselling clients in Australia. The research findings demonstrate the complex factors contributing to financial stress and the effectiveness of financial counselling in providing positive outcomes on a range of measures, including debt resolution, financial capability and health and wellbeing, and highlight the importance of early intervention. From a policy perspective, the study points to the importance of having a mix of strategies to address financial stress in low income earners that combine approaches based on individual responsibility and models based on social justice and advocacy.

Full text

I WISH
I’D KNOWN
SOONER!
The Impact of Financial Counselling on
Debt Resolution and Personal Wellbeing

Dr. Nicola Brackertz
I WISH
I’D KNOWN
SOONER!
T I  F C 
D R  P W

© The Salvation Army Australia Southern Territory 2012
All rights reserved. Except for fair dealing permied under the Copyright Act.
No part of this book may be reproduced by any means without the permission
in writing om the author/publisher.
National Library of Australia
Cataloguing-in-Publication data:
Brackertz, Nicola
I wish I’d known sooner!
Cataloguing in Publication entry is available om the
National Library of Australia catalogue.
ISBN 9780987218575
Printed on Envirocare – 100% Recycled
This study was conducted for The Salvation Army by researchers at the
Swinburne Institute, Swinburne University of Technology (Melbourne) and
has been cleared by the University’s Human Research Ethics Commiee.

Acknowledgements
Projects like these are not the making of one individual alone and many good people helped in the process.
The author would like to thank the women and men across Australia who took the time to answer this survey.
The information you provided will help us to improve the nancial counselling service for all. Many thanks go to
The Salvation Army’s nancial counsellors who made time in their busy schedules to assist in administering the
survey. Tracy Grinter, Maria Turnbull and Tony Devlin generously gave of their time in the exploratory phase of this
research and in the facilitation of the survey. Without their help this research would not have been possible.
Elli McGavin (Territorial Social Policy and Programme Development Manager) and Pamela Hanney (Doorways
Coordinator) om The Salvation Army not only instigated the research, but were active supporters and
co-collaborators throughout the process.
The Salvation Army acknowledges the ongoing support of Westpac for the Doorways philosophy that underpins
this research project.
At the Swinburne Institute the author would like to extend a special thanks to Liss Ralston who provided statistical
analysis, feedback and support throughout the project, and Edmee Kenny who was invaluable in the implementation
phase of the survey.

contents
Executive summary ................................................................................................................................................................................. 1
Key ndings ........................................................................................................................................................................................... 1
Recommendations ..............................................................................................................................................................................3
Introduction ............................................................................................................................................................................................... 5
What is nancial counselling? ..................................................................................................................................................... 5
Key concepts .............................................................................................................................................................................................6
Financial literacy and nancial capability .....................................................................................................................................6
Financial exclusion .............................................................................................................................................................................. 7
Causes and symptoms of debt and deprivation ......................................................................................................................... 7
Health and wellbeing .........................................................................................................................................................................8
Measuring the outcomes of nancial counselling .....................................................................................................................8
Methodology .............................................................................................................................................................................................9
Respondent proles – who is seeking nancial counselling? ................................................................................................... 11
Age and gender of respondents .................................................................................................................................................... 11
Language and ATSI ............................................................................................................................................................................ 11
Income .................................................................................................................................................................................................. 12
Housing ................................................................................................................................................................................................ 12
Household type .............................................................................................................................................................................13
Research results......................................................................................................................................................................................15
The impact of nancial counselling – client perceptions ...................................................................................................... 15
Debt resolution .............................................................................................................................................................................. 15
Advocacy .........................................................................................................................................................................................16
Financial capability .......................................................................................................................................................................16
Health and wellbeing ...................................................................................................................................................................16
In their own words ............................................................................................................................................................................ 17
Level and duration of debt .............................................................................................................................................................18
Respondent perceptions of debt problems ..........................................................................................................................19
Sources of debt ................................................................................................................................................................................. 20
Financial exclusion ............................................................................................................................................................................21
Causes and symptoms of nancial stress ...................................................................................................................................22
Health and wellbeing .......................................................................................................................................................................24
Findings .................................................................................................................................................................................................... 26
Conclusion and recommendations .................................................................................................................................................. 28
Recommendations ........................................................................................................................................................................... 28
Bibliography ............................................................................................................................................................................................ 29
Appendix 1: Survey ................................................................................................................................................................................31
Endnotes...................................................................................................................................................................................................35

F
Figure 1 Number of respondents by age and gender ............................................................................................................. 11
Figure 2 Do you speak a language other than English at home? ........................................................................................ 11
Figure 3 Are you Aboriginal or Torres Strait Islander? ............................................................................................................. 12
Figure 4 Housing ................................................................................................................................................................................13
Figure 5 Household type by gender .............................................................................................................................................13
Figure 6 Financial counselling outcomes ....................................................................................................................................15
Figure 7 Amount of debt owed .....................................................................................................................................................18
Figure 8 Time elapsed before help sought .................................................................................................................................19
Figure 9 Do you think your nancial diculties are likely to be temporary or ongoing? .............................................19
Figure 10 Sources of debt ................................................................................................................................................................. 20
Figure 11 Main reasons for nancial diculty (top eight) ........................................................................................................ 21
Figure 12 Proportion of respondents who are fully or partly nancially excluded ........................................................... 21
Figure 13 Proportion of respondents who cannot aord essential nancial products or services ..............................22
Figure 14 Number of stressors experiences in the past year ..................................................................................................22
Figure 15 Stressors by type ...............................................................................................................................................................23
Figure 16 Number of stressors by duration of nancial diculty ..........................................................................................24
Figure 17 Percentage of respondents who could not aord essentials of health and wellbeing ................................24
Figure 18 Self-reported health outcomes om nancial counselling ..................................................................................25
T
Table 1 Main source of income .................................................................................................................................................... 12
Table 2 Household type by gender .............................................................................................................................................14
Table 3 Amount of debt owed .....................................................................................................................................................18
Table 4 How long have you been experiencing nancial diculties? ..............................................................................18
Table 5 Number of debt sources ................................................................................................................................................ 20
Table 6 Indicator of stressors by type ........................................................................................................................................23

1

1
executive summAry
In 2010, one in ve Australian adults experienced nancial stress and could not pay their bills, rent or mortgage on
time or make minimum repayments on their credit cards, or had to sell or pawn something because they needed
cash. Many of these sought assistance om iends, family and welfare and community organisations. Some had to
go without meals or were unable to heat their home.
The Salvation Army provides ee and condential nancial counselling for individuals and families in nancial
diculties. For these individuals, referral to nancial counselling is oered as part of the new and innovative
approach to emergency relief being provided by The Salvation Army – the Doorways philosophy. The Doorways
philosophy expands emergency relief to provide a holistic and integrated case management approach that is
guided by core principles of individual rights and dignity, early intervention and capacity building using a strengths-
based approach. During 2011-12 nancial counselling was provided to over 10,000 people Australia-wide, most of
whom were on low incomes or were receiving government pensions or allowance payments.
In mid-2012, The Salvation Army commissioned the Swinburne Institute at Swinburne University to undertake
a survey of its nancial counselling recipients. The aim of the research was to determine the impact of nancial
counselling on an individual’s ability to resolve or reduce their nancial diculties and increase their nancial
capability, as well as study the impact of nancial counselling on their health and wellbeing.
K F
A month-long short, anonymous survey was administered to recipients of The Salvation Army nancial counselling
services Australia-wide. Where clients had trouble completing the survey because of language, literacy or
comprehension issues, nancial counsellors assisted them. The survey elicited 225 responses. The demographic
and socio-economic characteristics of respondents mirrored The Salvation Army’s nancial counselling clients
nationally. Consequently, survey responses can be seen as representative of the experiences of people accessing
The Salvation Army nancial counselling services.
■ 79% of respondents were on an allowance payment or pension.
■ 7% of respondents were Aboriginal or Torres Strait Islander, which
represents a disproportionally high number om this community.
■ 39% were in private rental and 22% were residing in public or community housing.
■ 67% were female.
■ 55% had been experiencing persistent nancial stress for 2 years or more.
A signicant nding of the survey was that respondents felt that nancial counselling was a positive experience,
with 94% indicating that they would be willing to seek help sooner in future.
Five key ndings emerged:
1. Financial counselling is eective and provides measurable positive outcomes on a range of measures,
including the resolution of debt related problems, advocacy, nancial capability and health and wellbeing. The
survey results suggest that nancial counselling is an important service that demonstrably benets clients on
multiple dimensions of nancial stress.
■ 68% of respondents felt their nancial situation had improved.
■ 75% of respondents indicated improved skills in prioritising debt.
■ 74% of respondents indicated that they now felt beer able to budget.
■ 74% of respondents said that the advice provided helped them avoid legal action.
■ 73% of respondents were able to access creditors’ hardship programs.

2 3
While nancial counselling is not able to address the structural and underlying causes of nancial stress, such as
inadequate incomes and the lack of suitable nancial products and services, it helps mitigate immediate crisis,
providing information and education to assist people to develop longer-term nancial management strategies.
2. Many people delay seeking nancial counselling for a long time aer the onset of nancial diculties.
Other studies have shown that many people with debt problems do not access advice services at all.1
This study found that many people wait a long time aer the onset of nancial diculties before seeking
nancial counselling.
■ 15% of survey respondents had waited for approximately one year.
■ 29% of respondents had waited for longer than one year before seeking help.
3. Seeking nancial counselling sooner increases the chances that nancial diculties can be resolved.
Survey respondents who had been in nancial diculties for a year or less:
■ experienced fewer stressors; and
■ were statistically more likely to report that their nancial diculties had been resolved (72%).
Financial stress is a complex problem with interlinked and sometimes mutually reinforcing causes and eects
(stressors) that can mount and worsen as time goes on, leading people to become trapped in a cycle of debt. Early
intervention is more eective in resolving debt issues and can prevent stressors om accumulating. Conversely,
people who had been in nancial diculties for longer tended to experience a higher number of stressors that
negatively impacted on their nances and their ability to resolve nancial stress.
4. Financial counselling contributes to positive health outcomes, especially in alleviating the stress and anxiety
associated with nancial diculties.
■ 68% of respondents had felt stressed about the future in the past year.
■ 69% now felt more positive about the future following nancial counselling.
■ 63% felt their mental and emotional wellbeing had improved as a result of nancial counselling.
■ 52% worried less about money problems.
Financial counselling also helped reduce the negative impact of environmental stressors, such as interpersonal
relationships and housing security, which if le unchecked may exacerbate nancial stress.
■ 51% of respondents indicated that their housing situation was more secure.
■ 45% of respondents indicated that their relationships with family and iends,
and their children (46%) had improved.
5. Men and women have dierent debt proles.
Women are disproportionately represented in nancial counselling, making up over two-thirds of respondents,
which mirrors the general client base of The Salvation Army nancial counselling services.
■ 32% of all respondents reported owing debt of $20,000 or more,
whilst the median amount of debt owed was $5,000 to $10,000.
■ 43% of men reported having signicantly higher levels of debt (in excess
of $20,000) compared to women, a statistically signicant dierence.
■ 20% of men reported having experienced persistent nancial stress
lasting for more than ve years compared to 12% of women (12%).
The prevalent sources of debt also diered:
■ Women were more likely to owe money for bills associated with running a household (e.g. utilities and ITC).
■ Men more oen struggled to repay money owing on loans (payday and personal) and mortgages.

3
This study presents a snapshot in time only, and as such suggests the need to beer understand the reasons why
people delay accessing these services and the ongoing impacts of nancial counselling. The fact that many clients
experience long-term nancial stress may indicate that not all of the benets of nancial counselling endure or
accrue to the same degree for all individuals.
The survey also highlights the reality of debt and nancial problems for individuals and families on such
constrained incomes. Whilst nancial counselling can assist to alleviate acute nancial crises, it cannot solve the
broader structural issues of social and economic disadvantage that contribute to the exacerbation and impact of
nancial stress.
R
1. To maintain and expand current nancial counselling services.
2. To advocate for and continue to work towards integrating nancial counselling into a holistic approach to
meeting the needs of individuals and families as demonstrated by The Salvation Army Doorways philosophy.
3. To support nancial counselling as a tool for early intervention and individual capacity building within a
holistic case management approach to social and economic disadvantage, as per The Salvation Army
Doorways philosophy.
4. Address the barriers that prevent people om accessing nancial counselling:
a) Develop and facilitate a communication and media strategy that promotes greater awareness of the nature,
benets and accessibility of nancial counselling services.
b) Undertake research to beer understand the barriers that delay and prevent people om accessing nancial
counselling services and develop strategies to overcome these. This may include dierent approaches for
dierent cohorts, for example, men and women and people in long- and short-term nancial stress.
c) Undertake research to beer understand the long-term impacts of nancial counselling.

4 5

5
introduction
Financial stress is a signicant problem for one in ve Australians, disproportionately aecting those on low
incomes, pensions or allowances payments.2 It is detrimental not only because it causes individual and family
hardship, but also because of the eect on the wider community. Debt is not solely the result of poor nancial
literacy or inadequate budgeting. Life events such as loss of employment or family break-up, external causes such
as increasing costs of living and decreasing housing aordability, structural factors such as lack of appropriate and
aordable nancial products and services, and other reasons such as ‘predatory’ credit practices can all trigger a
nancial crisis.
Financial stress can mean that people are unable to aord essential items such as food and heating or may not be
able to pay their bills. It is also a source of stress and anxiety which negatively aects people’s health and ability
to cope.
The Salvation Army provides ee and condential nancial counselling to those in nancial diculties, and in the
year 2011-12 provided assistance to more than 10,000 people Australia-wide. The service is delivered either face-
to-face or by telephone.
This national survey of 225 nancial counselling clients was commissioned by The Salvation Army and conducted
by the Swinburne Institute at Swinburne University in Melbourne in July 2012. The study investigated the impact
of The Salvation Army’s nancial counselling service on clients’ ability to resolve or reduce their nancial diculties,
as well as health and wellbeing and nancial capability outcomes. The research connects with broader debates
about how nancial literacy, nancial capability and nancial exclusion link with issues of poverty, social inclusion
and health and wellbeing.
What is nancial counselling?
Financial counsellors provide an important service to people who are experiencing nancial stress, many of whom
are on low incomes and may be having diculty coping with their situation. Money management is only one aspect
of nancial counselling. Financial counsellors also negotiate with creditors on clients’ behalf, determine if clients
are eligible for government assistance or hardship programs, and assist in accessing these programs. They provide
information on the options and consequences of debt recovery procedures, bankruptcy and other alternatives.
When necessary and where indicated, nancial counsellors may refer clients to services such as community legal
aid, personal counselling, gambling help or family support.
The combination of advocacy, empowerment, education and service linkage functions underpin the community
development approach and social justice principles of nancial counselling. Through this approach, nancial
counselling aims to provide short-term crisis management as well as longer-term and prevention strategies.
Financial counsellors work in community organisations, community legal centres and some government agencies.
Their services are ee, independent and condential.
Financial counselling is funded as part of the Commonwealth Financial Counselling (CFC) service strategy under
the Australian Government’s Financial Management Program (FMP) which is administered by the Department of
Families, Housing, Community Services and Indigenous Aairs (FaHCSIA). FMP ‘aims to build nancial resilience and
wellbeing for vulnerable people and those most at risk of nancial and social exclusion and disadvantage’.3 States
and Territories also fund nancial counselling services.
In 2011-12, nearly 100 community and local government organisations received approximately $15.3 million of
funding to deliver CFC across Australia.4 The Salvation Army, a recipient of this funding, supplements these funds
with their own resources to enhance service coverage and accessibility. The adequacy and security of funding for
nancial counselling services is an ongoing problem, as is the number of services available and the waiting times
involved in accessing the services.

6 7
Key concepts
The need for nancial counselling cannot be considered solely as a maer of debt. While nancial literacy and
budgeting ability are factors in nancial stress, individual, circumstantial and structural issues equently conspire
to place low income, marginalised or vulnerable individuals, families and groups in precarious nancial situations.
The ramications of this are serious for the aected individuals and for society more broadly, and are linked to
social and nancial exclusion, poverty and deprivation, and diminished health and wellbeing. These issues underpin
this study.
Financial Literacy and Financial Capability
Financial literacy and nancial capability are similar concepts, but they are not the same thing. In 2011 the
Australian Government released its National Financial Literacy Strategy, acknowledging the importance of
individuals’ capacity to understand money and nances and make sound nancial decisions. The strategy denes
nancial literacy as the ‘ability to make informed judgements and to take eective decisions regarding the use
and management of money’.5
There have been a number of important Australian studies on nancial literacy in the past decade. These include
the ANZ Adult Financial Literacy in Australia survey which was conducted four times between 2003 and 2011, and
identied that certain groups have lower levels of nancial literacy: young people under 25, people with no formal
post-secondary education, people with relatively low levels of income and assets, blue collar workers and women.6
Financial education is a key theme in nancial literacy. However, more knowledge does not necessarily translate
into changed behaviours, and nancial literacy alone does not guarantee the resolution of nancial diculties. For
a nancial literacy program to be successful, it must take into account and seek to positively inuence people’s
nancial aitudes as well as to increase nancial knowledge and literacy and lead to behaviour change.7
Furthermore, not all people have the same opportunities to actualise their nancial literacy, as income levels, income
security and systemic factors may present barriers. Consequently, provision of adequate structural elements such
as consumer protection and appropriate and aordable nancial products and services are necessary, alongside
adequate income support and regulation.
To account for these issues, many writers have advocated that nancial literacy should be understood in relation to
an individual’s behaviour according to context and not solely based on their nancial knowledge.8 This is embodied
in the concept of nancial capability which was adopted for this study. The most widely recognised amework
for nancial capability was developed by Atkinson and her colleagues at the University of Bristol in the UK.9 They
see nancial capability as encompassing how nancial literacy translates into changed behaviour and accounts for
circumstantial and structural factors. Its four key aspects are:
■ managing money, including making ends meet and keeping track of expenses
■ planning ahead, being prepared for unexpected events and planning for the future
■ choosing products, knowing about nancial products, being aware of risk
■ staying informed, keeping up to date with new nancial products or changes
to existing ones, knowing where to access relevant information.
While nancial capability is a more inclusive way of thinking about the skills and behaviours required of individuals
in relation to their management of nances, it does not address factors such as the availability and accessibility
of suitable nancial products and services for all demographics. Full participation in economic life also requires, in
addition to nancial capability, the opportunity to act on these capabilities. This points to the key role institutions
and policies have in creating a fair and equitable structural environment.

7
F E
Financial exclusion is one way of looking at the structural factors that may prevent individuals, groups and
communities om fully participating in economic life. In essence, nancial exclusion looks at the availability of
appropriate and aordable nancial products and services. In Australia, the Centre for Social Impact, together with
the National Australia Bank (NAB), has conducted a large-scale survey of nancial exclusion and developed a set
of nancial exclusion indicators. They concluded that around 15.6% of the population (2,650,000 individuals) were
either fully or partially nancially excluded om nancial services in 2010, rising to 17.2% in 2011.10
Simply having a particular nancial product (i.e. savings account, loans, and insurances) may be a misleading
indicator of nancial inclusion, primarily because government pensions and allowances can only be paid through
bank accounts. People may be excluded om some nancial products and services but may be over-represented
in the use of others (e.g. credit cards, payday loans) which do not suit their needs but exploit their vulnerabilities.
The cost of certain nancial services and products may be prohibitive for persons on low incomes. The Centre
for Social Impact calculated that, based on the average cost of the top 10 bank accounts and top 10 credit cards
that are designed for low income consumers, the annual cost of a basic bank account is $88 and a low cost credit
card $808. If one adds to this the cost of basic motor vehicle and basic home and contents insurance which was
calculated at $898, then the average annual cost for basic nancial services is $1,794, presenting a considerable
barrier to nancial inclusion for persons on a low annual income.11
This study adopted a simple measure of nancial exclusion that is aligned with the indicators used by the Centre for
Social Impact. A person was considered to be (partially) nancially excluded if they could not aord one or more of
the following: a basic savings or transaction account, a small loan om a bank or similar nancial institution (not a
payday loan), comprehensive motor vehicle insurance and home contents insurance.
The impact of nancial exclusion on individuals is signicant; they face diculties accessing funds in an emergency,
are more likely to struggle meeting major repayments, are signicantly less likely to have insurance to cover their
key assets (e.g. car) and are more likely to use inge credit providers (e.g. payday loans or Cash Converters),
thereby incurring a high cost of credit.12 They are also more likely to access government emergency payments and
community loan schemes.
It is important to recognise that nancial exclusion impacts not only on individuals, but also carries a societal cost
at community and economic levels.13 It is intertwined with issues of nancial capability, poverty, debt and social
exclusion, and is part of a series of interconnected processes that have numerous interrelated causes. A clear
directionality of cause and eect is dicult to disentangle, and nancial exclusion may be either a cause or a
consequence of social exclusion and poverty.14
C  S  D  D
Disadvantage is both a contributor to and a symptom of debt problems.15 Debt is a serious ongoing social and
economic problem for the whole community but one that aects the disadvantaged most severely.16
A study by the Legal Services Research Centre in the UK identied three types of causes of debt: changing
circumstances, poor money management and creditor behaviour. It conrmed what is captured in the wider
literature, namely, that debt problems stem om a variety of causes, such as changing circumstances, ill
health, relationship breakdown, loss of employment, parenthood, credit over-commitment and poor money
management. 17 Many people with debt problems lead unstable lives and move house equently and it is oen a
combination of events that provides the trigger for a debt crisis.18
Debt negatively impacts on peoples’ lives in a number of areas, including health (physical and mental), relationships
with family and iends,19 work, social networks, housing status, employment, education and plans for their future,
making it hard to carry on living normally.20 When debt problems are considered in the context of the multiple
contributing stressors (e.g. loss of employment, illness, family break-up) and in relation to social exclusion and
disadvantage, it is not surprising that many people may not make debt their priority consideration until it reaches
crisis point. Consequently, assistance to resolve debt issues oen involves resolving other diculties. It is not
unusual for people to experience a cycle of debt during which causes mount and increase.

8 9
H  W
Debt problems are a signicant cause of emotional stress, and the literature consistently identies the link between
physical and mental illness and debt problems.21
The link between debt, stress and anxiety is particularly strong.22 A UK study found that 89% of clients reported
worrying about money problems ‘most of the time’ and 48% believed that debt problems had a ‘great’ impact on
their health, with another 43% indicating that debt had ‘somewhat’ negatively aected their health; around three
in ve had sought treatment, medication or counselling as a result.23 These ndings are mirrored in the Australian
Bulk Debt Negotiation Project24 where 47% of clients represented experienced some form of ill health, including
mental illness, and in research by Wesley Mission which conrms the signicant impact of debt and nancial stress
on health and wellbeing.25
Debt and deprivation limit access to medical care, sometimes with serious consequences. Research om the USA
shows that households with high debt levels are less likely to seek healthcare.26 Australia has a system of universal
health care, meaning that people are generally able to access required medical treatments, regardless of their
ability to pay. However, there are a small percentage of Australians who struggle to access bulk-billing doctors, may
be on long waiting lists for treatments, and some are not able to aord the medicines prescribed.27 Dental care is
not part of the universal health system, and the expense is prohibitive for many people on low incomes or who are
experiencing nancial stress, with Saunders and Wong indicating that in 2008 only 45% of their sample were able
to access dental treatment when needed,28 and The Salvation Army reporting that 57% of their Emergency Relief
clients were not able to access needed dental treatment in 2012.29
In recognition of the fact that health and wellbeing are important causes and symptoms of nancial stress, this
study included a number of questions that aimed to ascertain respondents’ ability to aord healthcare and their
mental and physical wellbeing.
M  O  F C
In the same way that nancial stress can negatively aect many areas of peoples’ lives, so too debt advice can
have a variety of impacts, not all of which are directly related to nancial issues. In order to capture a broad
range of nancial counselling outcomes, this study utilised a range of measures targeted at identiing the issues
outlined above.
A amework of nancial capability was adopted to develop reference points for desirable outcomes. The survey
sought to determine:
■ sources and levels of debt
■ degree of nancial exclusion
■ presence and number of circumstantial factors (stressors)
■ duration of nancial stress, and client perception of whether this would be an ongoing problem
■ time elapsed between onset of debt problems and nancial counselling sought
■ eect of nancial stress on personal wellbeing and client ability to access medical and dental care
■ client perception of the degree to which nancial counselling contributed to debt resolution,
provided positive advocacy outcomes, aected health and wellbeing and contributed to
developing nancial capability.
This amework allowed key themes to be analysed in relation to each other and to be correlated with socio-
economic data. The demographic characteristics of survey respondents mirror, in terms of age, gender, proportion
of non-English speakers and proportion identiing as Aboriginal or Torres Strait Islander (ATSI), The Salvation
Army’s nancial counselling clients nationally. Consequently, survey responses can be seen as representative of the
experiences of Salvation Army nancial counselling clients nationally.

9
methodology
A short paper-based survey was administered to individuals accessing The Salvation Army’s nancial counselling
services nationwide between 1 July and 3 August 2012. The survey was voluntary, anonymous and condential. Ethics
clearance for the research was sought and granted by Swinburne University’s Human Research Ethics Commiee.
The survey aimed to establish an individual’s evaluation of the impact of nancial counselling, as well as their
circumstances, inuential structural factors, behaviours and wellbeing (psychological and physical). Due to the
sensitive nature of the issues and because many potential respondents are hard to reach for research purposes
(low income, marginalised and vulnerable persons), a number of practical and methodological challenges had to be
overcome. The success of the strategies outlined below resulted in 225 completed surveys being returned.
It was anticipated that many clients would be able to complete the survey on their own, but it was also known
that some had low literacy, insucient English language skills, or led actured, chaotic lives, making them unlikely
to complete and return the questionnaire (estimated at about 40% of clients). But it is just these groups who
may benet most om nancial counselling, and researchers felt that it was important to capture their responses.
Consequently, nancial counsellors were asked to assist with the implementation of the survey.
Survey packs containing an information statement for nancial counsellors and 20 participant bundles that
included the survey, a plain language statement and reply paid envelope were sent out to 60 nancial counsellors
(or nancial counsellor managers). A total of 1,200 surveys were delivered across 48 sites within each State and
Territory. These packs were sent to nancial counsellors following an introductory email. The initial mail-out was
followed with a telephone call to each site by the research assistant over the next two weeks (18 June to 6 July).
The purpose of the follow-up call was to ascertain that all survey packs had reached their destination and to
provide further clarication. The call also established a direct point of contact for support and feedback for those
administering the survey.
This initial contact process highlighted that a small number of nancial counselling sites would not be operating
for dierent lengths of time during the survey period (approximately 10 sites in total – two not at all and eight for
diering periods). This was primarily due to nancial counsellors taking leave, but was also due to stang issues
in at least two sites.
Financial counsellors were directed to ask all individuals over the age of 18 (except rst time users of the service
and persons who may experience emotional or psychological trauma as a result of answering the questions)
using the service during the survey period whether they would like to participate in the survey. People were given
the option to (aempt to) complete the survey while they were waiting for their scheduled appointment and
could then consult with the counsellor if there were questions they did not understand or if they had literacy or
language issues.
Individuals were given the option of sealing the completed survey in the provided prepaid and addressed envelope
and giving it to their nancial counsellor (who then forwarded it to the researchers) or they could post their
response themselves.
In the second and third weeks of the survey period (9 to 20 July), telephone calls were made to sites where initial
contact had yet to be made and to reiterate key details with specic sites. For example, a number of returned
surveys had been completed by rst time recipients of nancial counselling, who were not the target group for the
survey. In the nal week of data collection, every site was contacted to conrm that while this was ocially the
nal week, all surveys posted no later than 3 August would be accepted. The timeame was extended in order to
maximise the number of responses. Financial counsellors were asked to return unused surveys.
Throughout the survey period, the process of contacting sites allowed the research assistant to troubleshoot with
those nancial counsellors who were unable, for a variety of reasons, to administer the survey face-to-face. One
of the primary reasons was that they simply did not have time to do so, with many noting that they were working
part-time, and that individuals who t the survey respondent prole were not scheduled to visit the service during
this period. Consequently, the option of sending out surveys to those who t the required prole was introduced.

1110 11
Prior to the start of the survey period it had been determined that as one of the sites was a telephone counselling
service, those clients identied as ing the respondent prole would be mailed out the survey for completion.
Based on this precedent, when advised of issues administering surveys face-to-face, it was decided that the option
of mailing out the surveys should be made available to all sites. On 10 July an email was sent advising all nancial
counsellors that they could employ this approach, should they have regular clients who would not be aending
an appointment during the survey period. They were advised to use their judgement to determine who should be
sent the survey and to follow up with these clients. The total number who received the survey by mail is unknown,
but approximately seven sites advised that they had sent out the survey advising clients to return (via reply paid
envelope) of their own volition.
Data om completed surveys was entered into an Excel spread sheet and analysed using SPSS. The survey was
structured to allow for analysis of key factors which included nancial capability, health and wellbeing, nancial
exclusion, and client perceptions of nancial counselling outcomes.

1111
respondent profiles:
who is seeking finAnciAl counselling?
A  G  R
The survey elicited 225 responses, of which 67% were by women (n=151), 31% by men (n=70) and 2% of
respondents did not state their gender (n=4). Most respondents (52.9%) were 34-54 years of age. Persons aged
25-34 constituted another large group (19.1%).
This suggests two important things. First, women are more likely to seek assistance in alleviating debt on behalf of
themselves and their households. Second, the middle years of adulthood (34-54) where people have to juggle the
responsibilities of parenting, caring for others and work are the time when they are most vulnerable to nancial
stress. This is in line with ndings om research on who seeks emergency relief because they are nding it hard to
make ends meet.31
L  ATSI
The survey asked whether respondents spoke a
language other than English at home and whether
they identied as Aboriginal or Torres Strait Islander
(ATSI). Most were native English speakers (84%), which
is a slightly higher proportion than for the overall
population where 80% of people speak only English at
home.32 That is, persons seeking nancial counselling
om the Salvation Army are slightly less likely to be
om a non-English-speaking background, though this
dierence is not statistically signicant.
The high number of respondents identiing as ATSI
stands out. Respondents were almost three times more
likely to identi as ATSI (7%) than the Australian average
(2.5%).33 The high proportion of ATSI clients points to
high levels of nancial stress within that community.
18–24
years
25–34
years
35–44
years
Age
Responses (n=221)
45–54
years
55–64
years
65+
years
0
20
60
70
40
10
30
50
Female
Male
3
7
11
32
39
22 16
42
8
18
10
13
Figure 1 Number of respondents by age and gender (n=221)
Figure 2 Do you speak a language other
than English at home? (n=225)
Native English
speaker
84%
Not stated
2%
Language other
than English
14%

12 13
Figure 3 Are you Aboriginal or Torres Strait Islander? (n=225)
No
91%
Not stated
2%
Aboriginal or TSI
7%
I
The survey asked respondents for their main source of income. The overwhelming majority stated that this was a
government pension or allowance (79.1%). A smaller proportion (14.7%) received wages or salary (including om
their own business), with only a few respondents indicating workers or transport compensation (1.8%) and self-
employment (1.3%) as the main source. This points to the diculty of making ends meet on a pension or allowance
payment, which is corroborated by other recent research such as the ACOSS reports Who is missing out? Material
deprivation and income support payments34 and Surviving not living35 and Under pressure: Costs of living, nancial
hardship and emergency relief in Victoria.36
Table 1 Main source of income (n=225)
NUMBER PERCENT
ANY GOVERNMENT PENSION
OR ALLOWANCE  .
WAGES OR SALARY
INCLUDING FROM OWN BUSINESS  .
WORKERS OR TRANSPORT
COMPENSATION  .
SELFEMPLOYED  .
NOT STATED  .
NO INCOME  .
CHILD SUPPORT OR MAINTENANCE  .
DIVIDENDS OR INTEREST  .
H
The cost of housing in Australia is high, with Melbourne and Sydney being among the 15 most expensive cities in
the world.37 For low income earners, the cost of housing is a key contributor to nancial stress. The survey asked
respondents in which type of housing they lived.
Most respondents were private renters (39.1%) or were paying o their mortgage (20.9%). Public or community
housing renters constituted 21.8% of respondents. Few owned their home outright (4.9%) or lived with relatives
(3.6%) or iends (1.3%). Only a small proportion were living in transitional housing, crisis/short-term accommodation
or a caravan/car (1.3% each).
In the current tight rental market that has a signicant shortage of low cost rental properties, the high proportion
of private renters in this survey cohort suggests that for many who are also in receipt of pensions and allowance
payments, the costs associated with housing are an evident pressure.
Survey data also clearly shows that public housing, where the rent is capped at 25% of income, is no guarantee of
protection om nancial stress. Recent research on housing aordability found that ‘low income public renters ...

13
have the most severe aordability problem ..., which contradicts the false assumption that the 25% household rent
formula shelters such tenants om an aordability problem’.38 Rather than the commonly used measure where
30% of income is set as the benchmark for housing aordability, regardless of the person’s income, this study used
a more nuanced residual model of housing aordability. It applied a budget standard model to determine how
much money is le over for rent aer the essential items of living are paid for, which provides a good indicator of
housing and nancial stress.39 If a low cost budget standard is applied, the residual model showed that 69.1% of
public renters and 47.7% of private renters experience housing aordability problems.40
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Private rental
Public or community housing
Paying o mortgage
Home owner
Living with relatives
Not stated
Other
Caravan/car
Crisis/short-term accommodation
Transitional housing
Living with iends
Share house with unrelated people
Homeless or living-in-crisis accommodation
39%
22%
21%
5%
4%
2%
2%
1%
1%
1%
1%
1%
0%
Figure 4 Housing (n=225)
Household type
Most respondents lived alone (34%), with sole parents the second most numerous group (28%). Taken together,
the data showed that 62% of respondents lived in single income households. This suggests how sensitive single
income families are to cost of living pressures, with costs for rent and utilities being almost as high for a sole person
as they are for a couple, but without the extra income to oset this. It also indicates that government payments to
this group are insucient, as has been highlighted in the ACOSS Who is missing out? report.41
Living
alone
Sole
parent
Living with
a spouse or
partner with
dependent
child/ren
Count
Couple
only
Living in
a share
house
with family
Living in
a share
house with
unrelated
adults
Living with
a spouse
or partner
without
dependent
child/ren
Other
0
20
60
80
70
40
10
30
50
Male
Female
33
42
4
57
24
7
6
14 11
5
6
4
1
42/1
Figure 5 Household type by gender (n=221)

14 15
A number of statistically signicant dierences in the way men and women live became apparent when the data
was analysed by gender. Men were most likely to be living alone (47%), while most female respondents were sole
parents (38%). Among sole parents the gender divide was most pronounced, with only four of 61 being male. This
may reect two sides of the same coin, as women are more likely to have custody of the children aer family
break-up, as well as the caring and nancial responsibilities that come with this. This leaves men to either live on
their own or share a house with family (16%) or unrelated adults (9%) (men are more prevalent in each of these
categories to a statistically signicant degree).
It is interesting that women are more likely to be the person seeking nancial counselling in households where they
live with a partner or spouse and dependent children (15.9%), and it is suggested that this may reect the gender
divisions of household labour.
Table 2 Household type by gender (n=221)
WOMEN% MEN% TOTAL%
LIVING ALONE . . .
SOLE PARENT . . .
LIVING WITH A SPOUSE OR PARTNER
WITH DEPENDENT CHILD/REN . . .
COUPLE ONLY . . .
LIVING IN A SHARE HOUSE
WITH FAMILY . . .
LIVING IN A SHARE HOUSE WITH
UNRELATED ADULTS . . .
LIVING WITH A SPOUSE OR PARTNER
WITHOUT DEPENDENT CHILD/REN . . .
OTHER . . .
TOTAL . . .

15
reseArch results
I never thought that I would need help or that there was someone
there to help me. I will need more time but it will get beer.
T I  F C  C P
In order to determine the impact of nancial counselling, respondents were asked to indicate their agreement on a
ve point scale (strongly agree to strongly disagree) with a series of statements. The benets identied were many
and varied, and overwhelmingly positive. Self-reported outcomes in the areas of debt resolution, advocacy, health
and wellbeing and nancial capability all showed high levels of agreement that the service had helped them. The
fact that 94% of respondents agreed or strongly agreed that they would be willing to seek help sooner as a result
of aending the nancial counselling service aests to its ecacy.
0% 20% 40% 60% 80% 100%
Advice helped me avoid bankruptcy
My housing situation is more secure
My nancial situation has improved
My nancial diculties were resolved
I feel more positive about the future
My physical health has improved
My mental and/or emotional wellbeing has improved
I worry less about money problems
My relationship with my children has improved
My relationships with my family and iends have improved
I would be more willing to seek nancial help earlier
I feel beer able to save
I have access to no interest or low interest loans (e.g. NILS)
I have more awareness of my benets entitlements
I feel beer able to choose nancial products that t my situation
I feel beer able to prioritise debt
I feel beer able to budget
Advice helped me avoid or curtail legal action
I have had debts or nes waived or reduced
I have been able to access utility relief grants
I now have access to creditors’ hardship programs
53%
51%
68%
66%
69%
45%
63%
52%
46%
45%
94%
37%
36%
70%
62%
75%
74%
74%
48%
59%
73%
40% or less 41–60% 60% or more
Advocacy Financial capability Health and wellbeing Debt resolution
Figure 6 Financial counselling outcomes (n=225)
Debt resolution
I am happy and appreciative about this nancial counselling...
I feel I can handle my nances beer and I have a more positive
outlook in relation to my future nancial life.
A positive picture emerges of the nancial counselling service’s contribution to resolving clients’ nancial diculties.
More than two-thirds agreed or strongly agreed that ‘My nancial situation has improved’ (68%) and ‘My nancial
diculties were resolved’ (66%). Over half thought that ‘Advice helped me avoid bankruptcy’ (53%) and ‘My housing
situation is more secure’ (51%).

16 17
Advocacy
It’s amazing, [nancial counselling] made such a dierence in my life.
[It is] such a relief having someone there to be able to talk on your behalf.
A similarly positive response was evident in client perceptions of the nancial counselling service’s advocacy.
Almost three-quarters agreed or strongly agreed that ‘Advice helped me avoid or curtail legal action’ and ‘I now
have access to creditors’ hardship programs’. The service’s advocacy aided 59% of clients in accessing utility relief
grants, and nearly half of all clients had debts or nes waived or reduced. This aests to the ecacy of the nancial
counselling service in alleviating acute nancial stress by advocating on behalf of clients.
Financial capability
[Financial counselling] provided information that I never knew, that has helped
me understand how I got into the current situation and how to change it.
A mixed response was evident in relation to nancial capability. On the positive side, almost all respondents (94%)
indicated that they would be willing to seek help sooner, which shows that their experience with the service made
a positive dierence and that they now knew where to seek help and information in a nancial crisis.
Nearly two-thirds were beer able to prioritise debt (75%) and budget (74%) as a result of aending the service.
A large proportion also felt that they now had more awareness of their benets and entitlements (70%) and
were beer able to choose appropriate nancial products (62%). This represents a very pleasing outcome that
shows the educational benets of nancial counselling in terms of helping people to manage their money, choose
products and stay informed.
Financial counselling has assisted in meeting the immediate and short-term needs.
Long-term [I will have to] get the business/work running to maintain a steady income.
Over a third of clients (37%) felt that they were now beer able to save. Given the limited nancial resources of
the majority of the survey cohort (i.e. in receipt of a pension or allowance payment) this represents a signicant
achievement for individuals and families. However, it also suggests that as a means of planning ahead for
unforeseen circumstances, saving on a limited income is not only a function of nancial capability, but also of
available resources. Saving may not be a realistic option given the limited nancial resources of many.
Just over a third (36%) of respondents indicated that they had access to low interest or no interest loans (NILS)
as a result of using the nancial counselling service. This is a positive outcome for people whose acute nancial
stress may be due to, or exacerbated by, the need for an essential household item. There are a number of possible
reasons this number is not higher. NILS may not be appropriate for a number of clients, NILS may not meet the
credit needs of certain types of clients, and very limited incomes and poor credit history may prevent some clients
om accessing NILS.
These results show that while individuals can make great strides in improving their nancial capability, there are
underlying structural factors, such as the adequacy of allowance payments income and the availability of suitable
credit, that pose barriers to people on low incomes.
Health and wellbeing
Advice, encouragement and understanding helped
me feel beer in myself [and] about my situation.
Respondents agreed that nancial counselling had positive ow-on eects for their health, especially where
mental health and wellbeing were concerned. Over two-thirds (69%) felt more positive about the future, 63%
agreed that their mental and/or emotional wellbeing had improved and just over half (52%) now worried less
about money problems. These wellbeing eects also extended to relationships with their iends and family, which
45% of respondents felt had improved, and their children, where 46% agreed or strongly agreed. Positive eects
on physical health were also recorded, with 45% indicating an improvement.

17
I T O W
Respondents were asked whether they had any comments on the nancial counselling service. Their remarks are
insighul and complement the quantitative ndings om the survey.
One theme that came through very strongly and that was commented on oen was:
I only wish that I had come here sooner.
Two reasons emerged why people did not seek help sooner. Some did not know about the service. This was
expressed in comments like:
I am very grateful to be receiving help om a nancial counsellor and only wish
that other people could seek help also before they get into more strife and despair.
I didn’t realise that there was a service that we would not have to pay for so that is
the relieving thought to start with.
and
I feel [nancial counselling] needs to be advertised more
because not enough people know about this service.
The other reason was embarrassment:
[The service is] very iendly and warm, which makes
me feel less embarrassed about having to ask for help.
One way that counsellors helped clients to overcome embarrassment was by listening. Clients felt counsellors
cared and were non-judgemental and sensitive to their issues. This was commented on oen and was singled out
as an important and positive feature of the service.
My nancial counsellor [has been] very helpful, approachable, most importantly
understanding and non-judgemental. She [has] eased my burden a lot.
The benecial eect of nancial counselling on people’s emotional wellbeing came through very strongly and was
in part founded in a trust which clients felt in their counsellor and their abilities.
[Financial counselling] not only helps with nancial stress,
but emotional and mental wellbeing. This is a trustworthy service.
It is very important that people can access a service such as this.
and
I have been really down for a long time and I have got myself into an impossible
position where I feel trapped. The counsellor is positive and caring and I now feel
I have a ray of hope for the future. I don’t know what I would have done if le to
my own devices. I no longer feel alone.
Financial counselling gave clients a sense of empowerment and made them feel able to cope with their problems.
Should have gone much earlier. I feel supported, less chaotic and more in control
and empowered in my abilities. It is helping me change lifelong habits om a lack of
mentality to a more positive outlook and self-responsibility.
These comments suggests that nancial stress is a sensitive issue and that many people delay seeking help because
of embarrassment, because they don’t know that help is available, or because they think it’s too hard to deal with
their situation and nothing can be done. Once people use the service, they begin to feel more positive about their
situation when they are shown that there are strategies and actions they can take to alleviate their current crisis.

1918 19
L  D  D
Respondents were asked to estimate their level of debt om all sources, excluding their mortgage, but including
credit cards, store cards, car loans, rental arrears, gas or electricity arrears, and loans om banks and iends.
The median amount of debt owed was $5,000 to $10,000, but almost a third had debts in excess of $20,000.
Men (42.9%) were more likely to a statistically signicant degree to owe a large sum of money (more than $20,000)
than women (26.5%). Women were more likely to owe sums ranging om $3,001 to $20,000.
Table 3 Amount of debt owed
PERCENT
NONE .
$ OR LESS .
$  $, .
$,  $, .
$,  $, .
$,  $, .
$,  $, .
MORE THAN $, .
TOTAL .
None Less than
$500
$501 –
$2,000
$2,001 –
$3,000
$3,001 –
$5,000
$5,001 –
$10,000
$10,001 –
$20,000
More than
$20,000
0%
5%
15%
25%
45%
50%
35%
10%
20%
30%
40%
Female
Male
Figure 7 Amount of debt owed (n=221)
Table 4 How long have you been experiencing nancial diculties? (n=225)
PERCENT
LESS THAN  YEAR .
ABOUT  YEAR .
 YEARS .
 YEARS .
MORE THAN  YEARS .
NOT STATED .
TOTAL .
More than half of respondents (56%) were experiencing long-term nancial stress, lasting two years or more. Men
were more likely to have been in debt for a long time, with 20% answering that they had experienced nancial
stress for more than ve years, compared to women (11.9%).

1919
The survey asked respondents how long aer the onset of nancial diculties they had waited before seeking
nancial counselling. Data showed that 44% had delayed a year or longer before seeking assistance om a nancial
counsellor. This is important, as there is a statistically signicant correlation between the duration of nancial
diculty experienced and the likelihood that nancial diculties were able to be resolved.42 While almost two-thirds
of respondents agreed or strongly agreed that nancial counselling had helped to resolve their nancial diculties
(g. 6), only 60.3% of those who had experienced long-term nancial stress answered favourably, compared to
72% of those who had experienced nancial diculties for a year or less. This demonstrates that seeking nancial
counselling early on in a nancial crisis increases the likelihood of resolving the debt problem. It also demonstrates
the persistent nature of debt problems for people on low incomes.
I sought
help straight
away
About
6 weeks
About 2-3
months
About 4-6
months
One year Longer than
one year
Not
stated
0%
10%
30%
35%
2%
20%
5%
15%
25%
12%
8%
14%
20%
15%
29%
Figure 8 Time elapsed before help sought (n=225)
Respondent perceptions of debt problems
Respondents were asked whether they thought their
nancial diculties were likely to be temporary or
ongoing; 37% thought the problem was temporary and
43% thought the problem was an ongoing one.
There was a statistically signicant correlation between
the amount of debt owed and feeling that debts
were likely to be ongoing.43 Men (48.6%) were more
likely to think that their nancial diculties would be
ongoing than were women (39.7%), possibly because
they have higher levels of debt and tended to have
been in nancial stress for longer. This suggests that
respondents had fairly accurate perceptions of their
nancial situation.
Figure 9 Do you think your nancial diculties are
likely to be temporary or ongoing? (n=225)
Temporary
37% No current
nancial
diculties
2%
Not stated
1%
Don’t know
18%
Ongoing
43%

20 21
S  D
The survey asked respondents to indicate the reasons for their nancial diculties, allowing for multiple responses
om a predened list. Most respondents had multiple sources of debt, with between two and four sources being
the most common. However, 14.7% had ve or more sources, with one facing 10 sources.
Utilities (56%) were the most common reason, followed by credit or store cards (42%), telephone and ITC debts
(28%), personal loans (21%) and mortgages (20%). Fines (16%), loans om family members (16%), car repairs (12%),
rental arrears (12%), payday loans (11%) and car loans (11%) were less equent.
Table 5 Number of debt sources (n=225)
NUMBER OF DEBT SOURCES PERCENTAGE OF
RESPONDENTS
 .
 .
 .
 .
 .
+ .
0% 10% 20% 30% 40% 60%50%
Utility debts
Credit card or store card debt
Telephone/internet debt
Personal loan (om bank or building society)
Mortgage repayments
Fines (speeding, parking, public transport, etc.)
Loan om family member/iend
Mechanics repairs and/or car accident
Rental arrears/eviction notice
Car loan
Payday loan (e.g. Cash Converters, pawnbrokers)
Debts om former partner
Child support owed
Taxation debt
Centrelink overpayment
Registered with Centrelink but still awaiting benet
Business debt
No debts
Gambling debt
Centrelink payment suspended
56%
42%
28%
21%
20%
16%
16%
12%
12%
11%
11%
9%
7%
5%
4%
3%
3%
2%
1%
1%
Figure 10 Sources of debt (n=225)
Statistically signicant dierences were observed between men and women on some key items.44 Women were
more likely to nominate costs associated with running a household, such as utilities (60%) and telephone/ITC debts
(32%) (compared to 47% and 21% of men respectively). Men more equently nominated debts to lending agencies,
such as personal loans (25%), mortgage repayments (29%) and payday loans (16%) as sources of debt, than did
women (20%, 16% and 9% respectively). It is dicult to speculate on the reasons for this dierence. It may be
that women are more likely to seek nancial counselling for outstanding bills, rather than seeking further credit to
cover the cost. With a signicant proportion of the female respondents being represented as sole parents or living
alone, it is suggested that many will be in receipt on allowance payments which may present as a major barrier to
accessing loans.

21
0 10 20 30 40 50
Retrenchment/unemployment/underemployment
Government allowance too low/insucient income
Health/disability/mental health
Credit card or store card debt
Bills (utilities, phone)
Family break up/death of partner or close relative
Can’t pay debt
Rental arrears/eviction notice
40
33
24
21
21
20
14
11
Number of respondents
Figure 11 Main reasons for nancial diculty (top eight)
When asked to indicate in their own words the main reasons for their current nancial stress, respondents’
answers showed that the leading causes were insucient income caused by retrenchment, unemployment,
underemployment and an insucient level of government allowances and pensions. Health reasons, including
disability and mental illness, oen prevented respondents om earning sucient income. Financial pressure
was felt strongly through an inability to pay bills (utilities and phone), and as a consequence many respondents
used credit and store cards to cover expenses. An inability to repay credit or store card debt was the next most
equently cited contributor to nancial stress. Family break-up or the death of a partner or close relative also
strongly contributed.
F E
In order to determine the degree to which respondents experienced nancial exclusion, the survey asked them
to indicate how many, if any, of four basic nancial products and services they could aord: a basic savings or
transaction account, a small loan om a bank or similar nancial institution (not a payday loan), comprehensive
motor vehicle insurance and home contents insurance.
0 1 2 3 4
0%
10%
30%
20%
5%
15%
25%
14%
27%
20%
23%
16%
Number of items
Can’t aord
Figure 12 Proportion of respondents who are fully or partly nancially excluded (n=225)
Only 14% of respondents indicated that they were fully nancially included in the sense that they could aord all
four of these essential nancial items. On the opposite end of the spectrum, 16% were fully nancially excluded,
meaning that they could aord none of the items. A further 23% did not have three of the items and 20% had
only two.

2322 23
A very high proportion of respondents (72%) were unable to get a small loan om a bank, building society or
other nancial institution, which is not surprising, given their debt problems or precarious or low incomes. It also
highlights that in order to access funds to cover small emergencies or unexpected expenses, the great majority of
respondents may need to turn to more expensive sources of credit (such as credit cards, store cards, payday loans)
whose cost will further exacerbate their debt crisis. The other avenue is to access money through the informal
economy, such as borrowing om family and iends.
0% 10% 20% 40% 60% 80%30% 50% 70%
Small loan
Home contents insurance
Comprehensive motor vehicle insurance
Basic savings/transaction account
72%
54%
44%
32%
Can’t aord
Figure 13 Proportion of respondents who cannot aord essential nancial products or services (n=225)
This is corroborated by survey data which shows that 41.9% of respondents had credit card or store card debt, 15.7%
had borrowed money om family or iends, and 11.1% had taken out payday loans, one of the most expensive
forms of credit (g. 10).
A high proportion also indicated they could not aord home contents insurance (54%) or comprehensive motor
vehicle insurance (44%), making them vulnerable in the case of accidents or unforseen events, which can then
further exacerbate their nancial stress.
About a third (32%) of respondents indicated that they did not have a basic savings or transaction account. This
gure is high compared to the general population, for example the Measuring Financial Exclusion in Australia
report put the gure of people who do not have a basic bank account at 14.8%.45 It is possible that a number of
respondents misunderstood the question as asking whether they had a savings account, rather than a transaction
account, as it is unlikely that such a high proportion of respondents did not have a basic bank account. The
accuracy of the gure is questionable, as a large proportion (79.1%) of respondents received government pensions
or allowances which can only be paid into a bank account.
Taken together, the data demonstrates that most respondents were unable to aord basic nancial products and
services, which prevented them om fully participating in economic life and made them vulnerable to unforseen
adverse events, which may exacerbate their nancial stress.
C  S  F S
Financial stress rarely stems om one isolated reason
and its eects are interconnected and complex. A clear
chain of cause and eect cannot usually be identied,
and any number of stressful life events can either cause
or result om nancial diculties.
Respondents were asked to indicate om a list, allowing
multiple responses, whether in the past year they had
experienced any of a set of events (stressors) that can
contribute to or result om nancial stress. These
stressors are cumulative, and the more stressors a
person experiences in a given period of time, the more
likely they are to experience nancial stress.
Results show that 41% of respondents experienced
three to ve stressors in the past year, with 29%
experiencing a high number (six to nine).
Figure 14 Number of stressors experienced
in the past year (n=225)
9% Nil
41% Medium
3-5 Stressors
22% Low
1-2 Stressors
29% High
6-9 Stressors

2323
Perhaps not surprisingly, 68% of nancial counselling clients had felt stressed about the future, and 41% had
experienced harassment om creditors.
For purposes of analysis, stressors were grouped thematically in categories of health, new credit/dissaving measures
(e.g. selling or pawning items), reduced income, family issues and addiction. Issues related to health were most
prevalent, followed closely by events related to credit/dissaving measures. Stressors related to substance abuse
and gambling constituted only 6% of responses. This may be due in part because there are specialist gambling
counselling services, which were not included in the sample, in a number of states.
Table 6 Indicator of stressors by type
CATEGORY COUNT AVERAGE
PER CATEGORY
PERCENTAGE
OF RESPONSES
HEALTH  
NEW CREDIT/
DISSAVING MEASURES  
REDUCED INCOME  
FAMILY ISSUES  
ADDICTION  
NONE OF THE ABOVE  
0% 20% 40% 60% 80%
Felt stressed about the future
Mental illness
Prolonged or chronic illness
Disability
Physical injury that impacted on your ability to work
Caring duties due to illness of partner or dependant
Harassment om creditors
Borrowed to repay debt
Taken on new debt (loans, credit card, etc.)
Needed to sell or pawn possessions
Moved to more aordable housing
Reduction in working hours
Retrenchment
Relationship/family break-up
New conict with your family
Domestic violence
Birth of a child
Death of a partner
Drug dependency
Alcohol dependency
Gambling
None of the above
68%
29%
24%
23%
20%
15%
41%
29%
26%
26%
21%
22%
12%
24%
24%
11%
7%
3%
6%
6%
6%
2%
Addiction Family issues Reduced
income
New credit/
dissaving measures
Health
Figure 15 Stressors by type (n=225)
Overall the data showed a link between the number of stressors indicated and the duration of debt. When the
number of stressors a person was experiencing was correlated with the amount of time they had been in nancial
stress, a clear correlation became evident. The longer a person had been in nancial diculties, the more stressors
they were likely to experience. This conrms that stressors are cumulative and means that the longer a person
remains in debt, the harder it becomes to break out of the debt cycle.

24 25
Low (2 or less) Medium (3-5) High (6 or above)
0%
40%
80%
20%
60%
Number of stressors
One year or less Over one year
A substantial
meal at least
once a day
Medical
treatment
if needed
Regular
social contact
with other
people
Medicines
prescribed
by a doctor
Dental
treatment
if needed
0%
20%
60%
70%
40%
10%
30%
50%
14%
26%
32% 33%
64%
Can’t aord
Figure 16 Number of stressors by duration of nancial diculty (n=225)
Figure 17 Percentage of respondents who could not aord essentials of health and wellbeing (n=225)
H  W
Financial hardship has very real consequences for peoples’ physical health and their ability to aord medical care
and medicines.
A high proportion of respondents (64%) indicated they could not aord dental treatment if needed. While fewer
were unable to aord needed medical treatment (26%), it is signicant that a third of respondents (33%) were
unable to aord medicines prescribed by a doctor. Fourteen per cent of respondents did not have a substantial
meal at least once a day, indicating that they were experiencing severe nancial stress. All of these factors negatively
impact on physical health.
Financial stress also impacts on emotional and mental health. Not having enough money can be a very
isolating experience, causing people to curtail their social activities and lose iends as they cannot aord to go
out; about a third of our sample indicated that they could not aord regular contact with other people. The

25
My
relationships
with my
family and
iends have
improved
My
relationship
with my
children has
improved
I worry
less about
money
problems
My mental
and/or
emotional
wellbeing
has improved
My physical
health has
improved
0%
20%
60%
80%
70%
40%
10%
30%
50%
I feel more
positive
about the
future
Agree or strongly agree
45% 46%
52%
63%
45%
69%
Figure 18 Self-reported health outcomes om nancial counselling
consequence of this for wellbeing is that it can exacerbate feelings of stress and anxiety, which were already
very pronounced in two-thirds of our sample (g. 15). Mental illness is exacerbated by social isolation, and 29%
of respondents indicated that they had experienced mental illness in the past year (g. 15). Taken together, the
data conrms that nancial stress has a signicant and direct impact on personal health and wellbeing and
social connectedness.
Data om the outcomes section of the survey illuminates the mitigating impact which nancial counselling has
on client health and wellbeing (g. 6). Clients were asked to indicate their level of agreement (strongly agree to
strongly disagree) with a number of statements relating to nancial counselling outcomes. A positive eect on
physical health was noted by 45% of respondents. Mental health and wellbeing related outcomes recorded even
higher levels of agreement: ‘I feel more positive about the future’ (69%), ‘My mental and/or emotional wellbeing
has improved’ (63%) and ‘I worry less about money problems’ (52%). This shows that nancial counselling
provides measurable benecial outcomes for client wellbeing. This was borne out in the comments section of the
questionnaire where a large number of respondents noted how much improved they felt as a result of nancial
counselling and how much beer they felt able to cope.
Financial counselling also impacted positively on social relationships, with 56% indicating that it had a benecial
eect on their relationships with their children (46%) and their iends and family (45%).
When the number of stressors a person experienced (table 6) was correlated with the health outcomes of nancial
counselling, data showed that people who had a higher number of stressors were less likely to record positive
health outcomes as a result of nancial counselling.46 This is not surprising as people with more stressors tend to
have been in debt for a longer time, which makes it more dicult to resolve their diculties. It also shows that
the knock-on eect of nancial stress is more dicult to shi as dicult life events accrue. This underpins the
importance of understanding that seeking assistance during the early stages of nancial crisis is likely to have a
greater benecial eect.

26 27
findings
Five key ndings emerged:
1. Financial counselling is eective and provides measurable positive outcomes on a range of measures,
including the resolution of debt related problems, advocacy, nancial capability and health and wellbeing.
The survey results suggest that nancial counselling is an important service that demonstrably benets clients on
multiple dimensions of nancial stress.
■ 68% of respondents felt their nancial situation had improved.
■ 75% of respondents indicated improved skills in prioritising debt.
■ 74% of respondents indicated that they now felt beer able to budget.
■ 74% of respondents said that the advice provided helped them avoid legal action.
■ 73% of respondents were able to access creditors’ hardship programs.
While nancial counselling is not able to address the structural and underlying causes of nancial stress, such as
inadequate incomes and the lack of suitable nancial products and services, it helps mitigate immediate crisis,
providing information and education to assist people to develop longer-term nancial management strategies.
2. Many people delay seeking nancial counselling for a long time aer the onset of nancial diculties.
Other studies have shown that many people with debt problems do not access advice services at all.47 This study
found that many people wait a long time aer the onset of nancial diculties before seeking nancial counselling.
■ 15% of survey respondents had waited for approximately one year.
■ 29% of respondents had waited for longer than one year before seeking help.
3. Seeking nancial counselling sooner increases the chances that nancial diculties can be resolved.
Survey respondents who had been in nancial diculties for a year or less:
■ experienced fewer stressors; and
■ were statistically more likely to report that their nancial diculties had been resolved (72%).
Financial stress is a complex problem with interlinked and sometimes mutually reinforcing causes and eects
(stressors) that can mount and worsen as time goes on, leading people to become trapped in a cycle of debt. Early
intervention is more eective in resolving debt issues and can prevent stressors om accumulating. Conversely,
people who had been in nancial diculties for longer tended to experience a higher number of stressors that
negatively impacted on their nances and their ability to resolve nancial stress.
4. Financial counselling contributes to positive health outcomes, especially in alleviating the stress and anxiety
associated with nancial diculties.
■ 68% of respondents had felt stressed about the future in the past year.
■ 69% now felt more positive about the future following nancial counselling.
■ 63% felt their mental and emotional wellbeing had improved as a result of nancial counselling.
■ 52% worried less about money problems.
Financial counselling also helped reduce the negative impact of environmental stressors, such as interpersonal
relationships and housing security, which if le unchecked may exacerbate nancial stress.
■ 51% of respondents indicated that their housing situation was more secure.
■ 45% of respondents indicated that their relationships with family and iends
and their children (46%) had improved.

27
5. Men and women have dierent debt proles.
Women are disproportionately represented in nancial counselling, making up over two-thirds of respondents,
which mirrors the general client base of The Salvation Army nancial counselling.
■ 32% of all respondents reported owing debt of $20,000 or more,
whilst the median amount of debt owed was $5,000 to $10,000.
■ 43% of men reported having signicantly higher levels of debt (in excess
of $20,000) compared to women, a statistically signicant dierence.
■ 20% of men reported having experienced persistent nancial stress
lasting for more than ve years compared to 12% of women (12%).
The prevalent sources of debt also diered.
■ Women were more likely to owe money for bills associated with running a household (e.g. utilities and ITC).
■ Men more oen struggled to repay money owing on loans (payday and personal) and mortgages.
There could be various explanations for this. The higher number of women clients and diering debt proles could
indicate that women are more vulnerable to debt. This study also suggests gender dierences to nancial stressors,
where women are likely to seek help, while men are more likely to take on more debt to pay for existing debt. It is
also possible that women are less able or willing to access further loans.

28 29
conclusion And recommendAtions
The research ndings highlight the benecial impact of nancial counselling for individuals particularly in terms
of their nancial capability, their health and wellbeing and in resolving or alleviating debt problems. A signicant
nding is that these eects are more pronounced when help is sought sooner, rather than later.
Respondents’ comments show that aending nancial counselling was a positive experience that made a dierence
to their situation. Many were pleasantly surprised that they were received in a non-judgemental and understanding
way. Nearly all respondents (94%) indicated they would be more willing to seek nancial help earlier in the future.
In light of these ndings, it is important to consider what it is that prevents people om accessing nancial
counselling. The study found that many people delay seeking nancial counselling for a long time aer the onset
of nancial diculties, while other studies have shown that many people with debt problems do not access advice
services at all.48 Forty-four per cent of survey respondents waited for a year or longer before accessing assistance, a
trend that was even more pronounced in those experiencing long-term nancial stress, a group which represented
55% of the survey sample.
This study presents a snapshot in time only, and as such suggests the need to beer understand the reasons why
people delay accessing these services and the ongoing impacts of nancial counselling. The fact that many clients
experience long-term nancial stress may indicate that not all of the benets of nancial counselling endure or
accrue to the same degree for all individuals.
The survey also highlights the reality of debt and nancial problems for individuals and families on such
constrained incomes. Whilst nancial counselling can assist to alleviate acute nancial crises, it cannot solve the
broader structural issues of social and economic disadvantage that contribute to the exacerbation and impact
of nancial stress.
R
1. To maintain and expand current nancial counselling services.
2. To advocate for and continue to work towards integrating nancial counselling into a holistic approach to
meeting the needs of individuals and families as demonstrated by The Salvation Army Doorways philosophy.
3. To support nancial counselling as a tool for early intervention and individual capacity building within a
holistic case management approach to social and economic disadvantage, as per The Salvation Army
Doorways philosophy.
4. Address the barriers that prevent people om accessing nancial counselling:
a) Develop and facilitate a communication and media strategy that promotes greater awareness of the nature,
benets and accessibility of nancial counselling services.
b) Undertake research to beer understand the barriers that delay and prevent people om accessing nancial
counselling services and develop strategies to overcome these. This may include dierent approaches for
dierent cohorts, for example, men and women and people in long- and short-term nancial stress.
c) Undertake research to beer understand the long-term impacts of nancial counselling.

29
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30 31
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31
Appendix 1: survey

32 33

33

3534 35

3535
1 A telephone survey of 450 Magistrates Court
consumer default judgement debtors found that 67%
did not seek assistance with their debt problems
(Schetzer 2008). A report by Wesley Mission (2009)
found that only 26% of respondents sought help
aer experiencing nancial diculties and that 47%
sought no help at all.
2 Australian Bureau of Statistics (ABS) data om
the General social survey 2010 shows that 19% of
adults experienced one or more cash ow problems
in 2009-10 and that sole parent households with
dependent children scored much higher than the
general population on certain indicators of nancial
stress (ABS 2010).
3 FaHCSIA (2012).
4 FaHCSIA (2012).
5 ASIC (2011).
6 ANZ & Social Research Centre (2011).
7 Russell, R, Bailey, D & Wall, L (2011); Russell, R, Wall, L
& Doan, MP (2011).
8 Green, BL, McAllister, CL & Tarte, JM (2004); Kempson,
E, Collard, S & Moore, N (2005); Russell, R, Bailey, D
& Wall, L (2011); Turnell, A (2012).
9 Atkinson, A, McKay, S, Kempson, E & Collard, S (2006).
10 Connolly, C, Georgouras, M, Hems, L & Wolfson, L
(2011); Hems, L, Connolly, C & Georgouras, M (2012).
11 Hems, L, Connolly, C & Georgouras, M (2012).
12 Connolly, C, Georgouras, M, Hems, L & Wolfson, L
(2011).
13 ASIC (2011); Connolly, C & Hajaj, K (2001); Corrie, T
(2011); Russell, R, Bailey, D & Wall, L (2011).
14 Chant Link and Associates (2004); Pleasence, P,
Buck, A, Balmer, NJ & Williams, K (2007).
15 Schetzer, L (2007).
16 Nelthorpe, D & Digney, K (2011).
17 Pleasence, P, Buck, A, Balmer, NJ & Williams, K (2007).
18 Pleasence, P, Buck, A, Balmer, NJ & Williams, K (2007).
19 Kempson, E (2002); Neleton, Burrows, England &
Seavers (1999).
20 Pleasence, P, Buck, A, Balmer, NJ & Williams, K (2007).
21 Fitch, C, Hamilton, S, Basse, P & Davey, R (2011);
Nelthorpe, D & Digney, K (2011); Pleasence, P, Buck,
A, Balmer, NJ & Williams, K (2007); Stansfeld, Fuhrer,
Shipley & Marmot (2002); Wesley Mission (2010);
Kempson, E (2002).
22 Drentea, P (2000); Jacoby, M (2002); Reading, R
& Reynolds, S (2001).
23 Pleasence, P, Buck, A, Balmer, NJ & Williams, K (2007).
24 Nelthorpe, D & Digney, K (2011).
25 Wesley Mission (2009); Wesley Mission (2010).
26 Kalousova, L & Burgard, SA (2012).
27 Saunders, P & Wong, M (2009); Salvation Army (2012).
28 Saunders, P & Wong, M (2009).
29 The Salvation Army (2012).
30 It is dicult to accurately calculate a response rate;
1,200 surveys were sent out to nancial counsellors,
nominally giving a response rate of 19%. However,
it is not clear how many were not used because
counsellors were too busy or because not enough
clients ing the respondent prole visited the
service during the survey period.
31 Engels, B, Nissim, R & Landvogt, K (2009).
32 ABS (2011).
33 ABS (2011).
34 ACOSS (2012b).
35 ACOSS (2012a).
36 Engels, B, Nissim, R & Landvogt, K (2009).
37 Mercer Worldwide Cost of Living Survey 2012 – city
ranking hp://www.mercer.com/press-releases/
cost-of-living-rankings, viewed 31 August 2012.
38 Burke, T, Stone, M & Ralston, L (2011).
39 The budget standard model is based on the work of
Saunders (1998) where a ‘low cost budget standard
represents a standard of living which may require
ugal and careful management of resources but
would still allow social and economic participation
consistent with community standards and enable
the individual to full community expectations in the
workplace, at home and in the community’.
40 Burke, T, Stone, M & Ralston, L (2011).
41 ACOSS (2012b).
42 Chi-square at the 0.5.
43 Chi-square at the 0.5.
44 Chi-square at the 0.5.
45 Hems, L, Connolly, C & Georgouras, M (2012).
46 Pearson’s correlation at the 0.5.
47 A telephone survey of 450 Magistrates Court
consumer default judgement debtors found
that 67% did not seek assistance with their debt
problems (Schetzer 2008). A report by Wesley
Mission (2009) found that only 26% of respondents
sought help aer experiencing nancial diculties
and that 47% sought no help at all.
48 See endnote 1
endnotes