Money and Life
(Financial Planning Association of Australia)

Worrying about your finances can take a real toll on your mental health. With many people experiencing financial stress this year, we look at what you can do to improve your financial (and mental) wellbeing.

It’s been a trying time for many people, with our collective mental health taking a toll as the COVID-19 pandemic rolls on. The Melbourne Institute says one-in-three Australians are now reporting financial stress, while one-in-five are feeling ‘mental distress’.

The Melbourne Institute also found that self-employed, casual and contract workers are especially vulnerable to both financial stress (which is defined as difficulty paying for essential goods and services) and feelings of depression and anxiety.

Recognising the extent of the problem, the federal government has earmarked an extra $2.3 billion in this year’s budget for spending on mental health services.

It’s well known that our financial wellbeing and mental health go hand in hand. Severe or prolonged financial stress can trigger symptoms of anxiety and depression, relationship breakdowns, trouble sleeping and anti-social behaviour. This in turn can lead to further poor decision making when it comes to money.

Fortunately, there are things you can do to improve your financial security and wellbeing. If you’re experiencing financial stress, here are some practical steps you can take to get back on track.

Give yourself a financial health check

When you’re experiencing financial stress or hardship, it can be tempting to avoid the problem altogether; but this only makes things worse. Once you gain a clear understanding of your financial position, you’ll feel more in control and can take steps to improve your position.

Start by doing a financial health check to assess where your income is going. Use a spreadsheet or budget planner to list your income, debts and expenses. Then look for opportunities to reduce your expenses, pay down debt and increase your savings.

Renegotiate your bills

Renegotiating what you owe is a smart way to free up some cash flow for daily living and ease the pressure you feel about meeting your obligations.

If you’re having a hard time meeting expenses, it’s important to speak to your service providers as soon as possible. Let them know you’re doing it tough and ask to negotiate lower repayment amounts and extended timeframes.

Don’t be shy to ask for a better deal on any services you use, including phone bills, internet and utilities. Most organisations will try to work with you – it’s better for them to get paid (albeit slowly) than for you to default on what you owe them.

Pay down debt

With more cash flow available, you can concentrate on clearing your debts, a key step on the path to financial freedom. If you have lots of debt, it’s worth seeking the advice of a financial counsellor. They can advise you on the most efficient and cost effective way to repay what you owe. You might be able to refinance, take advantage of ‘no-interest’ periods or consolidate your debts into a single monthly repayment at a lower rate. Just make sure that you get advice from a licenced professional, and that you’ll definitely be paying less.

Make bank accounts your best friend

Keeping all of your money in one bank account makes it hard to keep track of how much you have and how much you owe. One simple strategy to help you manage your money is to set up several bank accounts, each with a different purpose. For example, one to receive your income, another to pay household expenses, one for discretionary ‘spending’ and one for saving.

You can set up automatic payments to transfer the right amount of money into each account when you get paid. That way, you’ll always have the money put aside to pay your bills as they arise. Make sure to set up direct debits or automatic payments for each of your regular household bills from your expense account, so there’s no chance of falling behind in future.

Build your savings

Feeling financially secure goes hand in hand with having a good financial safety net in place. The more you have put aside for a rainy day, the less stressed you’ll feel when things don’t go to plan. Aim to build up your emergency fund to cover six-months’ worth of living expenses for yourself and your family. Again, creating an automatic transfer of funds to your ‘emergency’ savings account each month is an easy option. Then sit back and watch your savings grow.

Where to get help

If you’re experiencing financial hardship, struggling to make ends meet, or find yourself on the wrong end of one too many late payment notices, remember, there is help available.

Financial counselling is a free service that exists to support people in financial difficulty. A financial counsellor is qualified to provide advice and advocacy to anyone struggling to manage debt, or unable to meet their expenses. They can even contact your creditors on your behalf and negotiate repayment arrangements.

You can find a financial counsellor in your area using the ‘Search’ tool on the government’s MoneySmart website.

You can also call the National Debt Helpline on 1800 007 007, which is a free, independent and confidential financial counselling service.

If you need mental health support, there are services available online and over the phone.

Beyond Blue

If you’d like to chat to someone in person, Beyond Blue operates a 24/7 phone support service, where you can speak to a trained mental health professional. They also have a range of resources on their website, or you can chat with them online between 3pm and 12am AEST.

Lifeline

If you need immediate crisis support, call Lifeline on 13 11 14. Their confidential telephone crisis support service is available 24/7 from a landline, payphone or mobile.

Lifeline also offers a range of self-help tools, facts and information on their website.

No matter your situation, there’s plenty you can do to improve your financial security and wellbeing. There is help and support available, so seek advice at the earliest opportunity.

If you’d like help to reach your financial goals speak to a FINANCIAL PLANNER.