Close to one in three Aussies is feeling the pinch financially, with money worries reportedly leading to sleep loss, conflicts in relationships, isolation, as well as a range of other things1.
These were the findings from the inaugural Financial Stress Index, compiled by global research firm CoreData on behalf of Aussie group, Financial Mindfulness, which indicated financial stress is not only being experienced by low-income households in 20172.
We check out some of the statistics from the research, what defines financial stress, and what steps you could put in place to potentially improve your financial position and overall wellbeing.
Findings from the research
Statistics from the Financial Stress Index revealed the following about financially-stressed Aussies3:
- More than 66% felt money worries led to feelings of fear, anxiety and/or depression
- More than 60% felt their physical health was affected by financial stress
- About 75% said they argued about money with their partner or family
- More than 70% said they had problems sleeping due to money concerns
- Nearly nine out of 10 said they often avoided social functions due to financial stress.
What defines financial stress?
According to the Australian Bureau of Statistics, there are two financial stress indicators—these include financial-stress experiences and missing-out experiences4.
Some examples of financial-stress experiences include:
- You’re unable to pay various bills on time
- You spend more money than you receive
- You can’t raise $2,000 in a week for something important
- You seek assistance from friends, family or welfare and community groups.
Some examples of missing-out experiences include:
- You’re not able to afford a night out once a fortnight
- You can’t afford a week-long holiday once a year
- You can’t afford friends or family over for a meal once a month
- You aren’t able to cover any recreational activities.
Actions that could help turn things around
Create a budget
Writing down what you earn, owe and spend could help you to create a workable budget, and at the same time let you quickly identify areas where you could be saving.
Save a bit of money regularly
Even a small amount of cash deposited on a frequent basis could go a long way towards your savings goals. In fact, 41% of Aussies say they save just a little at a time5.
Take cash and leave your credit card at home
Credit cards are handy but they’ll often cost you as they typically charge high interest rates on top of the amount you’ve already taken out.
Write a grocery list that only includes what you need
Over a 12-month period, Aussies will waste more than 4 million tonnes of food, which is enough to bridge the gap between Australia and New Zealand three times6, so it’s worth a thought.
Prioritise your big-ticket items
Buying a car, going on holiday, and moving home all within a six-month period mightn’t be financially viable. Spacing things out and creating a manageable goals timeline might help.
Put some emergency cash aside
This will help next time you bust your phone or need a last minute trip to the dentist. Plus, an emergency fund means you won’t have to rely on high interest borrowing options.
Talk money with your partner
One in two Aussie couples admit to arguing about money7, so if you haven’t already, sit down and make sure you’re on the same page, and that both parties’ goals are being considered.
Call other providers
You more than likely have several product and service providers, and figures show you could save more than a grand annually on energy alone just by switching from the highest priced plan to the most competitive on the market8.
Consider the value of a back-up plan
Whether it’s life insurance, income protection (which provides up to 75% of your income if you can’t work due to illness or injury), or contents insurance to cover items that may be lost, damaged or stolen, there are a range of insurances that could help should the unexpected happen.
Care about your future income
The government’s Age Pension alone is unlikely to be able to cover a comfortable or even modest lifestyle in retirement9, so putting a little extra into super while you have time on your side could reduce the potential of further financial stress later on.
Where to go for assistance
If you or someone you know are feeling financially stressed, there is help and information available. You can talk to a financial counsellor at the National Debt Helpline by calling 1800 007 007. Alternatively, visit the beyondblue website or phone Lifeline on 131 114.
In the meantime, if you want help creating a workable budget, try our online budget planner calculator. And, you might also want to check out AMP's award-winning Bett3r Account, which can make managing your money easier, as it allows you to divide your money into pay, save and spend buckets.
The following articles might also provide some additional ideas:
1 - 3 CoreData / Financial Mindfulness Financial Stress Index – 2017 full press release
4 ABS - Household Expenditure Survey, Australia: Summary of Results, 2015-16 paragraph 2, 3, 4
5 ASIC’s MoneySmart – How Australians Save Money table 1
6 Foodwise: Reduce Food Waste - Food Waste Fast Facts table 1
7 Finder - Heated conversations: 1 in 2 Aussie couples argue about finances paragraph 1
8 Mozo: Sick of high energy bills? Aussies willing to change providers could be saving over $1,000 a year paragraph 2
9 The ASFA Retirement Standard – June quarter 2017 paragraph 4
Paying off debt
Our free online learning module gives you tips around how to control debt and repay it, and where to go if you need help.
Nearly one in two people plan on doing the same thing with the cash they get back from the ATO. What do you have in mind?