‘Almost three quarters of households must ‘take steps' to improve financial health

‘Almost three quarters of households must ‘take steps’ to improve financial health

Importance of financial health

In the Netherlands we only talk about financial health when we are in financial trouble. It seems that there are only two options: with problems you are unhealthy, without you are healthy. But that’s a black and white representation of reality. We need to look at financial health in a broader, more positive context. Do you feel confident about your finances? Are you prepared for the future? Do you have a buffer to absorb unexpected shocks?

There is often still profit to be made

But also: When could I stop working and travel for a year? How can I prepare financially for entrepreneurship? All these kinds of subjects play a role, and there is often still profit to be made for people without financial problems. The challenge is to maintain a constant balance within that spectrum. This study differs from other studies in that it focuses on the broad spectrum of financial health, not just debt or income.

Financial Health Scale

In this report, Deloitte charts the financial health of Dutch households. A scale for financial health has been developed for this, with associated health levels. These have been developed together with our partners and are not only intended to offer new insights, but also to encourage Dutch people to change themselves and to enable organizations to support them in this as well as possible. In this way we want to contribute to improving the financial health of all Dutch people. Because financial health is relevant for everyone, as this research shows.

To ask

We examined the financial health of Dutch households by asking them about their situation, behaviour, attitude and feelings regarding the underlying domains Income, Expenditure, Savings, Borrowing and Planning, and the balance between them. We also included their knowledge of financial matters and their overall financial attitude. This produces the following picture.

Financially Healthy can be even healthier

There is also plenty of room for improvement among financially healthy people. The fact that they are financially healthy now is no guarantee for the future. No less than 31% of financially Healthy people do not make financial plans. One quarter has consumer debt. One in ten of this group has no idea what their debts look like. In addition, one in ten do not have a buffer to get by for six months or more if their main source of income suddenly disappears. Furthermore, a large group (more than 40%) does not invest if they have money left over for a longer period of time.

Attitude: a lot of attention to short term

A healthy financial attitude means not being too impulsive and looking at both the short and long term. Many Dutch people – including Dutch people whom we consider to be part of the financially healthy group – are guided in their attitude by the short term. When asked about their financial attitude, a quarter to 35% of the respondents show a preference for the short term. For example, they would rather borrow money to buy something right away than save for it. Attitude is not the same as behavior, but people are more likely to perform behavior that they are positive about. A focus on the short term makes it more difficult to get by financially and increases the risk of payment arrears.

Financial emancipation needed

Men appear to be financially healthier than women. Men score higher in four of the five domains – only the subscore of women in the Lending domain is better. Men have a higher income and are more likely to get by well. Women also have smaller savings buffers and are less able to predict their income. In addition, women not only have less knowledge and insight into financial matters, they also feel more insecure about it. In all these areas there are starting points for the financial emancipation battle that is necessary to improve the financial position of women.

Continuation

We want to conduct this survey annually to see what the state of the financial health of the Netherlands is. With this we want to help create awareness and provide insight into changes, and show where there are possible areas for improvement in our society. In the coming years, Deloitte will take on the role of driving force in this area. Together on the road to a financially healthy Netherlands!

‘Almost three quarters of households must ‘take steps’ to improve financial health
Source link ‘Almost three quarters of households must ‘take steps’ to improve financial health

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