The numbers of Gouldian Finches have decreased rather rapidly during the 20th century. Their habitat has been reduced or altered. Early research signaled a parasite called air sac mite, was responsible for the decline of the Gouldian. This is no longer considered to be a major factor. In general, The Gouldian Finches are susceptible to diseases and viral infections. Their splendid colors mean that they are easily killed by predatory animals. Fires are listed as the number one threat to the natural populations. The total number of Gouldian finches altogether is not low, however, because they are among the most popular pet birds, and are bred in captivity for the pet trade.

Actions have been taken and are underway to implement a recovery plan to recover and conserve its natural habitats, such as building protective fencing to prevent damage by cattle. Attempts at reintroduction have so far proved unsuccessful; it was also suggested to develop management guidelines for land-holders about appropriate land management, promoting the recovery program and Gouldian Finche preservation.

Although often bred in a colony in captivity, in the wild The Gouldian Finch is not a colony bird. However, out of the mating time of year it amasses in flocks often a mixed flock consisting of Longtail Finches, Masked Finches and Gouldians. This is probably a defence against predation. Flocks used to consist of up to 1000″2000 individuals. During the breeding season they are usually found on rough scree slopes where vegetation is sparse. In the dry season they are more nomadic and will move to wherever there is food and water.