According to a newly released report from Dun and Bradstreet, Australia is feeling more settled and optimistic. Interest rates are low, housing prices are on the rise, personal savings have increased and there’s a general feeling of business confidence that’s cautiously emerged post election.

In other words, Australians are reporting feeling less financially stressed than they have been for most of the year (read more on maintaining your financial comfort).

Now you’re probably thinking sounds great, so where exactly is the problem?

For individuals

Well, whilst financial stress has stabilised (and even dropped a little), it’s still higher than it was during the dark GFC fall-out years of 2009-2011. Oh, and it’s about to be Christmas – you know, that time of year when people often vastly exceed their budget on prezzies, entertaining, holidays and splurging in general. And that in turn often leads to credit card blow outs and repayment issues.

So despite things looking and feeling more rosy than they have in a while, Dun & Bradstreet’s report highlighted the risk of financial stress rising in the lead up to Christmas/summer holidays due to a somewhat false high.

I guess the message here is if you know you (or your family) tend to go a bit overboard at Christmas time – take care and maybe do a little planning and budgeting before it’s too late.

And what about business?

By and large, Australians have largely responded to the recent fiscal contraction by saving more and spending less. So just because the mood is brighter, it doesn’t necessarily mean you should expect to see a huge surge in consumer spending (or in B2B spending either) – even though it’s retail spending is currently higher than expected.

Whilst financial stress indexes have improved and 16% of businesses expecting 2014 to yield better trade activity than 2013 (with just 2% expecting weaker trade), there’s also been subdued growth in wages and a soft labour market – which really belies how cautious business has become.

The other thing we’ve noticed is that, after years of business owners really struggling to be able to get finance (often in order to keep their cash flowing), now finance is becoming more and more available, fewer business owners are willing to take up their bank’s latest lending offers – maybe to their own detriment.

The best thing you can do as a business owner is plan dual ‘what if’ strategies. What if business goes up, what if it goes down. That way you can recognise the markers along the way and take appropriate action where necessary. In other words, plan for the worst and work towards achieving a best.

In other words regardless of whether you’re a business owner or a consumer, the financial landscape looks like it’s changed a bit. Maybe forever or maybe just for the time being. But whatever it turns into – it looks like this is the ‘new normal’ for the next while. Shall we call it ‘happy fiscal conservatism’?

Of course if we can help you better plot a better path for your personal or business financials, we’d be delighted to help. You can call Kerry on 6023 1700, drop us a note or connect with Kerry via LinkedIn.

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