St.George Bank has released research findings revealing more than one in three (35 per cent) plan on paying down their credit cards and personal debt and nine per cent will pay down their mortgage, meaning that a total of 44 per cent intend on using the one-off payment to help pay down their personal debt.
Less than half (42 per cent) of those eligible for the latest government stimulus payments intend spending all or part of it. A further one in three (31 per cent) plan on saving all or part of their one-off payment and some people will choose a combination of spending, saving and/or paying down debt with proportions of the payment.
The research, commissioned by St.George and conducted by Galaxy research, analysed the responses of over 1000 Australians last week, just before the first of the cash payments started to flow to the estimated 8.7 million taxpayers.
The results showed that men (45 per cent) are more likely to spend their stimulus package than women (38 per cent) and of those spending their cash, respondents are most likely to spend it on lifestyle items (39 per cent), day-to-day living expenses (33 per cent), holidays (25 per cent) and on their children (17 per cent).
Of those who plan on spending at least part of their stimulus payment, the average proportion they plan to spend is 79 per cent. Just under half (47 per cent) plan on spending all of the payment. Therefore, of the reported $7.7 billion in handouts, an estimated 34 per cent ($2.6 billion) will be spent.
“There is no doubt the current economic climate is causing many people to act cautiously with all financial transactions and some are choosing to take a more conservative approach to this one-off cash payment,” said Andrew Moore, St.George general manager retail bank distribution.
“This is demonstrated by the finding that nearly half of recipients plan to use the cash to pay off debt. This shows confidence continues to be low as some people look for ways to protect themselves.”
The research also reveals a few key differences in the spending intentions of different demographics. For example, part-time (45 per cent) and non-workers (46 per cent) are more likely to spend it than full-time workers (39 per cent); and those with a household income below $40,000 (46 per cent) are more likely to spend it than those with a household income between $40,000 and $90,000 (42 per cent) or over $90,000 (39 per cent). There is little difference between the generations, with all equally likely to spend their stimulus contributions.
“It makes sense that those in lower income brackets, or part-time or non-workers are more likely to spend their cash bonuses, pointing perhaps to their greater immediate needs than those with a higher income. What’s particularly interesting is the difference between the spending intentions of men and women – with men appearing to be much more eager to take the opportunity to inject money into the economy, while women appear to perhaps be more prudent in planning their own personal finances,” said Moore.
The research also reveals that there will be a slight lag between when people receive the stimulus payment, and when they spend it. Four in ten (42 per cent) who plan on spending the money plan to do so immediately, and 91 per cent plan on spending the money within three months. This means an estimated 15 per cent of the total package, or $1.2 billion will be spent immediately, and 31 per cent, or $2.4 billion will be spent within three months.
“It appears that many Australians may be looking at these payments as a true bonus, being able to buy those extra lifestyle items that they might have been thinking of for some time, but had put off purchasing. It’s an opportune time to be able to spend a little extra, as well as pay down personal debt and/or give your personal savings a significant boost,” said Moore.