Unsurprisingly, most Australians are experiencing unprecedented levels of financial stress. Australia has ended an almost 30-year streak of economic growth due to coronavirus. The pandemic has resulted in an estimated 1.2 million jobs lost and the start of a recession. Whether you’re already in a difficult financial situation or predicting money issues in the near future, it’s important to address this debilitating stress as soon as possible.
Impacts of Financial Stress
Financial problems can cause significant issues for your health, such as sleep problems and insomnia, heart disease, high blood pressure, depression and anxiety. These health problems can spiral into life-threatening issues and put a strain on your personal relationships. Additionally, health problems and their attendant health care bills can only send you spiralling into more debt.
Common Causes of Financial Stress
According to a Q4 2019 survey by the NAB Australian Wellbeing Survey, the top three financial concerns for Australians are:
- Financing retirement
- Providing for family’s future
- Medical bills/health care
Other notable stressors included building an emergency fund, mortgage or rent, household bills and costs, food and necessities, and debt repayments.
Five Financial Stress Management Tips
Money problems happen to almost everyone. The most important thing is to address the stress head-on so you don’t become overwhelmed.
Here are our five top tips for managing your financial stress.
1. Track Your Spending and Create a Budget
Even if you only have minimal income coming in from unemployment benefits or a part-time job, you need to regain control of your money. Open all of your bank accounts and look through your last three months of spending. Track every purchase you made into categories. This will give you a complete picture of where your money goes and any spending you can afford to cut out. You might find unnecessary bank charges, subscriptions you don’t even use or overspending in areas such as eating out.
Next, create a budget based on your income and your necessary expenses. If there’s money left over, you can plan that out for luxuries and “fun” spending.
2. Seek Professional Help
If you’re in significant amounts of debt, you can seek professional debt-advice services that can help you formulate a plan. Or, debt consolidation groups can help you consolidate your debts into one payment. There’s a tremendous sense of relief when you only have to worry about one payment and one creditor.
3. Avoid Temptations
Often people under financial stress continue unnecessary shopping. This is because shopping is a coping mechanism and can often provide feelings of relief. However, if you’re under financial pressure, it’s more than likely you should cut all (or most) non-essential spending.
You can avoid temptations by:
- Unsubscribing from retail emails
- Unfollow retail accounts on your social media accounts
- Avoid malls
4. Make One Financial Decision at a Time
When you’re in a tight financial situation, it can feel impossible to address every problem screaming for your attention. We suggest tackling one problem at a time. Make a list of all the things you have to address and prioritise them. Then work your way down the list.
5. Track Your Progress
After you take control of your finances, you will make progress. However, some people may find that for all their effort, the development seems slow. It’s essential to track your progress so you can see how far you’ve come and how much closer you are to your goal.
Whether it’s tracking your savings growth, debt payoff or a decrease in non-essential spending, seeing the numbers can provide you with the motivation to keep going.
Looking to the Future
You can significantly ease your feelings of financial stress by regaining control of your situation. When people understand their situation, they feel a sense of empowerment. You can get through any challenging situation if you prepare, plan and remind yourself that things will get better soon.