Almost four out of 10 people in WA would have to sell something or turn to credit if faced by an unexpected bill, a survey by the Financial Counsellors Association of WA has found.

The cost-of-living survey, which was conducted on 1,074 respondents in July 2024, found 37 per cent said they would be unable to cover an unexpected $500 bill without either borrowing, selling assets or using a form of credit.

Financial Counsellors Association of WA executive officer Melanie Hopkinson said more people were seeking financial help than ever before.

“[We are seeing] people who have not never reached out to services before,” she said.

“We saw in the report that 51 per cent are cutting back on food or switching to less nutritious food, which obviously has implications.

“We see people pulling back on important insurances, and of course, more and more people are really finding it difficult to make ends meet.”

Ms Hopkinson said people often cut back on food when they found themselves in financial difficulties because they prioritised keeping their housing and then sought relief from agencies or borrowed money to buy food and medicine.

She said some people turned to expensive forms of credit.

“Our members are seeing people with up to 10 different buy-now, pay-later, or payday loans, for example,” she said.

“It’s very easy to get stuck in a debt spiral when you turn to those kinds of credit.”

Making sacrifices

ABC Radio Perth listeners shared the ways they had cut back to make ends meet:

Andrew: “Many people don’t have a spare $500, living pay to pay. Car insurance already cancelled. If your car breaks down, thousands to fix — you’re screwed. Can’t fix the car, can’t work, can’t pay the rent. One incident away from disaster.”

Kat: “Our cut back is no home or car insurance, no berries until they’re under $4 a punnet. No longer shop at the local markets because not all the items are clearly priced, less muscle meat and more offal.”

Cal: “I have intolerances with certain foods, and they always seem to be double to similar foods I can’t eat. Bread is $7, 2 litres of milk, $6.20. Only buy food on offer but it never seems to be basics and have cut back on meat. I do have a spare $500 thankfully.”

Mel: “I don’t have the money for a deposit for a rental until I get my deposit back from my current rental so in a month’s time, I may be homeless. Most disappointing is the bank I’ve been with for 40+ years won’t give me a small personal loan for that deposit even though I will be able to pay it back as soon as I get my bond back. It’s scary how a small financial shock can turn your life into a train wreck.”

Liz: “As a pensioner I am having to be very inventive in how I stretch my dollar. I can’t afford the ‘buy two for less’ deals either. But what makes me struggle is the cost of the internet, which I have to have as everything is now online.”

Call for more relief

Ms Hopkinson said while state and federal governments had already introduced some forms of cost-of-living relief, there was more the association would like to see delivered for people on low incomes.

“It’s so important that people can keep their cars on the road and fully registered.”

She suggested the state government could also extend its rent relief program which provided one-off rent relief payments to help eligible tenants who were at risk of eviction because their rent was in arrears. 

She would also like the see the hardship utility grant scheme extended beyond gas and electricity to be available to social housing tenants to pay for water charges as well.

She also wanted an extension of free public transport for school students to cover TAFE students as well.

“It would be great to see an increase in funding for both emergency relief and individual financial counselling services across the state,” she said.

“There’s such a huge demand for those services.”

Insurance increases

The Financial Counsellors Association of WA’s survey findings were backed up by figures released last week by the Actuaries Institute, which found 15 per cent of Australian households were struggling to afford insurance.

In WA, premiums for home insurance rose, on average, 19 per cent in the past year, forcing many people to make tough decisions about whether they could afford to keep their policies.

Financial Counselling Australia co-chief executive Peter Gartland said costs for insurers had increased over the past year but he urged people to shop around and query their bills if their premiums had gone up considerably.

“Shop around because really, when there is a claim, it really doesn’t matter how many years you’ve been with an insurer, you’re treated no differently,” he said.

“Consider increasing your excess costs, which will lower the premium.

“The other thing to think about also is pay by the month insurance, so long as there’s no additional costs attached with that, so you spread the pain over the course of 12 months.”