1 in 5 ECEC educators have no savings – low wages and bills preventing savings plans
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A recent survey of over 1,000 Australians working in the broader professional field of education found that almost one in five (17 per cent) had no savings at all, and that over half of those surveyed (53 per cent) regularly dipped into their savings accounts to pay the rent or mortgage, cover the cost of bills, or to buy groceries.
The findings reflect concerns raised by United Voice, who have previously accused Australia’s Government of “failing Australia’s educators by continually failing to fund professional pay, causing financial disadvantage and financial insecurity both throughout decades of service and in retirement”.
The union has been vocal about the shortfall of wages and superannuation in the early childhood education and care (ECEC) sector, describing it as “a very real and raw issue” for 110,000 educators working in the long day care subset of ECEC, where 96 per cent of the workforce is female.
More than a quarter of those in the recent survey had less than $1,000 in savings, falling well short of most financial expert recommendations of an equivalent of six months worth of expenses.
One in five female workers surveyed had less than $250 in savings, meaning they were alarmingly close to financial difficulty should their employment be interrupted for any reason. For both genders, those aged 45-54 had the lowest savings balances, with almost a third in the age bracket having less than $250 in reserve.
The results, which were commissioned by AMP Bank, are part of the Bank’s broader push to “encourage Australian’s to pay closer attention to their savings and take an interest in interest, and to help them grow their wealth at a time when wages are weak, the cost of living continues to increase and interest rates are at record lows,”. an AMP spokesperson said.
AMP CEO Sally Bruce said the research reflects national data, which shows a declining rate in savings post the Global Financial Crisis. She believes a number of factors, including rising housing wealth (until recently), weak wages growth, and ongoing increases in the cost of living, coupled with record low interest rates, have contributed to the drop.
Concerned about the lack of savings cushion, Ms Bruce said “For most Australians, having a pot of money to use when times are tough or to fund the nicer things in life such as a new home or a holiday can have a huge impact on health and morale as well as your wallet.”
With almost one in four (23 per cent) of education professionals having no savings account, and 57 per cent not knowing their interest rate, AMP is encouraging educators to take an active interest in saving, with the research noting that those who showed an interest in their interest rate ended up saving more than twice as much money each month compared with their peers.
“It’s common sense, but we’re also encouraging people to work on their financial literacy. Clean up your finances regularly to see where you could be getting a better deal. Review your spending patterns to see where you can save money. Set some savings goals and commit to putting aside a certain amount each month, no matter how small it may seem,” Ms Bruce said.
Those working in the education and care sector may be interested in the following links which provide general advice in relation to financial planning, setting savings goals, and understanding interest rates.
Readers should note that this advice is general in nature, and should seek advice from a registered financial planning professional in relation to their unique circumstances.
To learn more about the campaign for higher wages in the ECEC sector, and to find out how to be involved, please see here.
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