Borrowing Money

New research released today by BankWest, has revealed that Australians are stretching the friendship limits of credit as a staggering $12 billion worth of IOUs are currently owed to family and friends, with the 18-34 age group being the biggest culprits.

The national Newspoll survey commissioned by BankWest has discovered that 54 per cent of Australians have borrowed money from their family or mates in the past, with ten percent of these borrowers happily admitting that they?ve never paid a cent of it back!

Borrowing money has at some time led to friction between about 800,000 lendees and lenders, with males twice as likely as females to have clashed over cash with family and friends.

The research showed that on the whole, Australians have no qualms about borrowing money. It also showed that they had a high expectation about how much they should receive. Of those who have ever borrowed money from family and friends the average amount they would feel comfortable borrowing is approximately $3,000. This amount rises to $4,300 for those without children.

Explains BankWest?s Dave Hunt, "We commissioned the research as part of the Get Australia Saving initiative to gauge people?s attitudes to managing their finances and were really surprised by the findings. We found that people who borrow money from family and friends currently owe an average of $1,700 per person. But those same people say they would feel comfortable borrowing almost double this amount, meaning there?s a real possibility that the estimate of $12 billion worth of IOUs could actually blow out to $24 billion."

Of those who have ever borrowed money from family and friends the top uses for this borrowed money were to pay for:
1. Outstanding debts - 42 per cent
2. Petrol and car expenses - 31 per cent
3. Groceries and household bills - 29 per cent
4. Entertainment activities/alcohol/meals - 28 per cent

Hunt continues, "Credit is a useful tool when it?s used sensibly and people are in a position to make repayments on the balance. What?s particularly worrying is that nearly three million people have borrowed money from their loved ones to repay other debts, indicating they?re not using credit wisely."

"As part of the Get Australia Saving initiative, we?re trying to help people learn effective strategies to manage their money more effectively and ultimately get out of the red and into a healthy savings habit."

According to Gay Curtis, money coach and author of Smart Couples? Guide to Money, "Before you ask for a loan from your family and friends to buy an item, ask yourself the question, ?Do I really need it??. If the answer is yes, make sure you can repay it or else you could be putting your relationship in jeopardy. If you?re struggling to save, a simple method is to put around 20 per cent of your pay towards repaying the debt. Commit and stick to it by both signing an agreement."

To help people better manage credit and become savvier with their finances, BankWest is spearheading the Get Australia Saving campaign. The bank has teamed up with Gay Curtis, to sponsor a free website ? www.getsaving.com.au. It?s filled with money tips and advice, a budget planner as well as a great money personality profile taking the confusion out of finances and making saving simple.

Notes***
The nationally representative Newspoll survey was commissioned by BankWest and interviewed 997 Australians aged 18-64. The survey results were post-weighted to Australian Bureau of Statistics data on a range of criteria.