Key findings:

• There is a distinct mindset divide that defines how people are navigating current economic challenges - those ‘leaning in’ to their finances and those ‘leaning out’.
• Those leaning in have a more proactive approach to their finances, seeking out information, making plans for the future, and investing time in building their financial literacy. A full 55 per cent are focused on building wealth in the next 12 months, and 1 in 3 plan to invest in shares.
• Those leaning out tend to avoid thinking about their finances, focusing more on dealing with immediate needs as they arise. Some 43 per cent feel hopeless in the face of rising costs, and one in four prefer not to think about personal finances at all.
• This mindset divide spans all generations, income levels and gender and becomes more pronounced as years pass thus highlighting the importance of making informed financial decisions early.

As we move further into 2023, Australians are grappling with a volatile and inflationary financial outlook. The current climate has brought about significant financial pressures, with more than half of all Australians stating they’re in a worse financial position today than a year ago. This climate of uncertainty makes it more important than ever for people to make smart financial choices.

Personal Finance D_Stilled, new research from The Growth D_Stillery in collaboration with research partner Verve Australia, focuses on exploring the mind and mood of Australians and personal finances. We sought to understand the stories that people tell themselves about their finances and how these stories are affecting the way they navigate current economic pressures.

One significant finding that emerged was a stark divide in mindset between those ‘leaning in’ to their finances and those ‘leaning out’. This divide spans all generations, income levels and genders.

Leaning in

Those who are leaning in are more proactive regarding their finances, actively seeking out informed advice, building their financial literacy, and making plans for the future. This approach leads to higher confidence and hope for the future.

People who lean in tend to have more diverse portfolios of products and are more capable of making their money work for them. They are active, confident, and forward-thinking individuals who are approaching the year ahead with their eyes wide open.

They have developed and continue to build safety nets that can protect them from unexpected challenges and set them up for success.

This group is twice as likely to say they have enough insurance to cover contingencies and are more focused on building wealth. A third plan to invest in shares in the next 12 months.

Leaning out

Those leaning out avoid thinking about finances, focusing more on dealing with immediate needs as they arise. One in four of those leaning out say they don't like to think about their finances at all.

People with this mindset tend to have a lower financial IQ, which leads to less confidence in managing personal finances. Almost half (43 per cent of this group) say they feel hopeless in the face of rising costs.

This cohort is more focused more on managing their finances day to day, but they’re not always aware of the choices available to them and are potentially digging themselves into a deeper hole. Close to half of this group believe circumstances out of their control tend to derail their finances.

While there is less distinguishable difference in the financial confidence and hope of Gen Z on either side of the mindset divide, as age and time kick in, we begin to see a more stark contrast and wider divide between those leaning in and leaning out.

This highlights the importance of early engagement and choices and the compounding effect it can have in later life.

So why is this important?

The mindset split between leaning in and leaning out influences the myriad of choices we make in daily life. Those who lean in have more choices available to them and are better able to balance long and short-term trade-offs and goals, setting goals for the future and making decisions with an eye to achieving them.

Meanwhile, those who lean out are more likely to focus on the short-term, dealing with immediate needs and expenses without considering the long-term implications.

Essentials D_Stilled, also part of the Growth D_Stillery’s D_Stilled series and released earlier this year, showed that 2023 will be a year of re-evaluation, with close to 80 per cent of Australian consumer spending shifting over the next 12 months. Whilst consumers may be looking to cut back on non-essentials like eating out, gaming and fashion, they are also exploring alternate options for those categories deemed more essential insurance, mortgages and finances in general. This provides a unique opportunity for brands to play a role in assisting Australians to lean in (or, as the case may be lean in further) and make more informed choices during this time.

Providing financial information is not enough to bridge the divide. Connecting with audiences and their evolving priorities requires an understanding of where both sides of the divide sit and their unique lifestage challenges.

Brands need to provide information in a way that is engaging and relevant to their audiences, showing an understanding of personal narratives. They must help consumers see the bigger picture and the long-term implications of their choices. Brands that can help more Australians lean in will be rewarded with increased engagement and trust.

In conclusion, understanding the mindset divide between leaning in and leaning out is crucial. Brands must acknowledge this gap and provide tailored information to help consumers make informed decisions. With the right approach, it is possible to help more Australians lean in and take control of their financial futures.

If you're interested in learning more about the different audiences leaning in and leaning out, and the opportunities to connect with them around their unique narratives, goals, and financial products, you can download the Personal Finance D_Stilled report here.