Flagging the financial action gap

Research into Australians’ financial red flags revealed the biggest one is knowing what to do and still not doing it. This highlights the ‘action gap’ many of us experience in improving our financial health. Closing the gap requires making action relevant to our lives now, building confidence and reducing perceived barriers to acting, rather than just providing more education.

Most Australians can recognise a poor financial decision when they see one.

We know investing without research or following the advice of ‘finfluencers’ is risky. We know hiding debt from a partner can damage trust. We know setting goals, building emergency savings and paying off credit cards are generally sensible. While many Australians already know which behaviours support their financial health, they often struggle to convert that knowledge into consistent action.

That is the central finding running through the Choosi Financial Red Flags Report, research conducted by MYMAVINS for Choosi. The study asked Australians to classify financial behaviours as red, beige or green flags, then compared those judgements with what people actually do.

The action gap

More than 4 in 5 Australians see establishing short- and long-term financial goals as a green flag, yet nearly 3 in 10 do not have clear goals or plans. Almost 9 in 10 see paying off credit card balances in full each month as a green flag, but nearly 1 in 4 do not do it.

The pattern continues across longer-term financial resilience. More than 4 in 5 recognise keeping three to six months of living expenses in an emergency fund as a green flag, but only around 1 in 2 have one. Voluntary superannuation contributions are viewed positively by more than 4 in 5, yet fewer than 3 in 10 make them.

These gaps reveal the limits of information-led engagement. If people already know what ‘good’ looks like, repeating the lesson more loudly is unlikely to cut through. The challenge is to help people apply that knowledge amid competing priorities, limited attention and financial pressure.

Financial capability is more than knowledge

Financial capability is often treated as a synonym for financial literacy. Capability includes knowing what to do, but also having the confidence, opportunity, motivation and practical systems to follow through. Someone may understand the value of an emergency fund but have no surplus income to build one. They may believe budgeting is sensible but find a rigid monthly plan impossible when bills or income fluctuate.

Close to 7 in 10 Australians identify reading and understanding financial product terms as a green flag, yet over 3 in 10 do not regularly do so. This may reflect complexity, fatigue or a belief that the effort required outweighs the immediate benefit.

The same applies to professional support. Nearly 3 in 4 see seeking advice from a professional as a green flag and presumably valuable, but only less than 3 in 10 have done so within the previous three years.

For advisers and financial institutions, this shifts the question from ‘Do consumers understand?’ to ‘What is preventing consumers from acting on what they understand?’

Financial pressure changes what is perceived as possible

It is easy to moralise financial behaviour when it is presented as a list of red and green flags. The research points to a more human reality.

Nearly 3 in 5 Australians have avoided social activities because of cost, rising to around 2 in 3 among Gen X. Avoiding social events was not generally seen as a red flag. Most classified it as beige, while close to 3 in 10 saw it as green.

Australians are not only changing their spending. They are renegotiating what responsible behaviour means under pressure. While saying no to a dinner, birthday or weekend away may help protect the household budget, it can also reduce connection, enjoyment and quality of life.

Therefore, financial health cannot be understood solely through balances, debt or savings outcomes. It is also reflected in whether people feel secure, in control and able to participate in life. A technically ‘responsible’ decision may still carry an emotional or social cost trade off.

This supports MYMAVINS’ broader view that financial health is a dynamic system shaped by capability, resilience, wellbeing and behaviour, rather than a static score. Better outcomes depend on improving the direction people are heading, not merely documenting where they have landed.

Relationships with money can impact our relationships with people

Nearly 4 in 5 Australians see hiding spending, debt or financial problems from a partner or family member as a red flag. While, 7 in 10 consider it a green flag to discuss finances with a partner or family to align goals, only around 3 in 5 do it.

Even discussing salary and financial status early in a relationship divides opinion. Close to 2 in 5 see it as green, 1 in 4 see it as red and the remainder largely place it in the beige zone.

Financial openness can build trust, but money conversations also expose differences in values, habits, power and expectations. Telling people to ‘talk about money’ without helping them navigate those dynamics may not lead to constructive action.

Advisers and providers can create tools that make these conversations easier. Shared goal-setting exercises, household check-ins and prompts that normalise disclosure can move money from a source of secrecy or conflict towards collaborative planning.

Beige flags are not neutral

Red and green flags are easy to interpret. Beige flags are more revealing.

They capture behaviours Australians see as ambiguous, contextual or not serious enough to demand action. Buy Now, Pay Later for everyday purchases is a good example. Nearly 1 in 2 see it as a red flag, but more than 2 in 5 classify it as beige. Those who see it as beige are much more likely to use it than those who see it as red.

A beige classification can operate as permission. The behaviour may not be ideal, but it feels common, manageable or socially acceptable. That perception can reduce urgency, even when repeated use creates financial strain.

Avoiding close monitoring of a bank balance is a red flag for more than 1 in 2, yet close to 2 in 5 see it as beige. Asking family or friends for loans is a red flag for more than 3 in 5, but beige for 3 in 10.

For financial services providers, beige flags may be valuable early warning signs. They identify behaviours that may not feel serious enough for consumers to seek support. Timely prompts, simple diagnostics and non-judgemental guidance can help prevent a manageable pattern becoming a crisis.

Younger Australians are navigating a different environment

Younger Australians are operating in an environment shaped by social media, digital investing, frictionless spending and visible lifestyle comparison. Nearly 3 in 5 Australians see taking generic financial advice from finance influencers or social media personalities as a red flag. However, 1 in 4 Gen Z and close to 1 in 4 Gen Y respondents have done so, compared with only around 1 in 10 Gen X and 1 in 20 Baby Boomers or older. Similarly, while over 4 in 5 see overspending to keep up with peers as a red flag, Gen Z (presumably often driven by social media) are substantially more likely than Baby Boomers to admit doing it.

The opportunity is not to dismiss digital channels, but to compete within them. Younger audiences have an appetite for accessible and culturally relevant financial content. The challenge is helping them distinguish general commentary from credible guidance suited to their circumstances.

Financial institutions relying only on formal, information-heavy channels risk leaving the field open to more engaging but less reliable voices and influences.

Design for action, not just awareness

The findings point to a practical agenda for financial services.

1.       First, measure behaviour as well as knowledge. Awareness of the right action may coexist with low confidence, limited resilience or inconsistent follow-through.

2.       Second, reduce friction with simple systems such as separating money into spending and savings buckets, automating transfers, reviewing subscriptions and creating regular money check-ins. These interventions work with everyday behaviour rather than assuming unlimited attention or willpower.

3.       Third, intervene at the right moment. A generic annual budgeting message may be less useful than support triggered by a missed payment, repeated overdraft, sudden balance decline or major life event.

4.       Fourth, communicate without judgement. Many behaviours reflect constraint, stress or complexity rather than carelessness.

5.       Finally, connect small actions to outcomes people value now. Retirement adequacy matters, but so do sleeping better, feeling in control, avoiding arguments and enjoying life without financial dread. Linking actions to these pervasive emotional needs is much more likely to get their attention and follow through.

The opportunity

Australians are often better at identifying good financial behaviour than sustaining it.

Knowledge needs to be supported by confidence, practical tools, timely guidance and environments that make better choices easier. Financial institutions should not only tell people what a green flag looks like. They should help make green-flag behaviour realistic, repeatable and rewarding. Engagement is strongest when financial health supports our quality of life today, rather than being pursued as an abstract goal in itself.

The biggest opportunity is closing the distance between intentions and actions. When that gap narrows, financial health can shift from something people understand in principle to something they experience in everyday life.

Author

Tai Rotem is a consulting partner at MYMAVINS with several decades experience in consumer, financial services, public health, and social research.

Reach out to him at Tai@mymavins.com.au