The significant increase in cost of living over recent years has left many Australians feeling financial stress. Rising inflation and higher prices for essentials like housing, fuel, and groceries is putting immense pressure on many households, impacting physical and mental health as a result. Given the various effects stress can have on the mind and body, it’s crucial to address it as soon as possible. While there isn’t a one size fits all answer, there are some practical tips for managing stress and improving your financial situation.
The impact of financial stress on health
Financial stress is the feeling of worry, anxiety, or fear related to your financial situation. It can arise from a variety of circumstances, including living pay to pay, being unable to cover bills, or dealing with unexpected expenses such as medical bills or car repairs. For many people, the current economic conditions have worsened this stress, as rising costs outpace wage growth, making it more challenging to stay afloat financially.
Dealing with constant financial pressure takes a toll on your physical and mental health. Chronic financial stress can lead to a variety of health problems, including:
- Mental health issues:
Prolonged stress about money can lead to anxiety, depression, and a general sense of hopelessness. Constant worry about finances can make it difficult to enjoy daily activities or even function at work. - Physical health problems:
Stress releases hormones like cortisol, which in high amounts can lead to physical problems such as high blood pressure, weakened immune systems, and even an increased risk of heart disease. - Sleep disorders:
Stress often leads to sleeplessness or poor-quality sleep, as people lie awake at night worrying. Sleep deprivation can make it harder to focus and can further exacerbate mental health issues. - Relationship strain:
Money is a common source of conflict in relationships, and financial stress can put significant strain on couples or families, sometimes leading to arguments, resentment, or even relationship breakdowns.
Managing your financial stress
- Create a budget and stick to it
A well-thought-out budget is the cornerstone of managing financial stress. Many people feel overwhelmed because they don’t have a clear understanding of where their money is going. By tracking every dollar that comes in and goes out, you can gain more control over your finances.
Start by listing all your essential expenses, such as rent or mortgage payments, utility bills, and groceries. Next, factor in discretionary spending like dining out or entertainment. Compare these figures to your income and look for areas where you might be able to cut back.
Regularly reviewing and adjusting your budget helps you identify trends, avoid unnecessary spending, and ensure you’re living within your means. If necessary, use budget tracking apps that can automate the process, sending you alerts when you’re nearing your spending limits.
- Prioritise emergency savings
Having a small financial cushion can reduce the anxiety of facing unexpected expenses, such as car repairs or medical bills. Start by setting aside a small portion of your income each month into a separate savings account. Even if it’s just $20 a week, those small contributions will add up over time.
This may take time to build up, but having any level of emergency savings offers peace of mind. The knowledge that you have a financial safety net helps alleviate some of the stress of living pay to pay.
- Seek financial advice
If managing your finances feels overwhelming or if you’re unsure about how to get ahead, seeking professional financial advice can be a game-changer. Many people avoid reaching out for help due to stigma or fear of being judged, but a financial adviser or planner can offer you expert and tailored advice specific to your personal situation.
Sometimes, having an expert's perspective can provide clarity, reduce feelings of helplessness and significantly help you gain control over your finances and your stress.
To ensure our customers have access to appropriate financial advice we have formed a relationship with Alliance Wealth which you can learn more about on our website*.
- Focus on what you can control
One of the biggest sources of stress is feeling like your financial situation is out of control. While it’s true that you can’t control rising interest rates or increasing grocery prices, focusing on the things you can control will help you regain some peace of mind.
For example, review your monthly expenses and identify small changes you can make to reduce costs. This could mean switching to a more affordable utility provider, cutting out subscription services you no longer use, buying your groceries from a cheaper alternative supermarket or meal planning to reduce food waste. These small, manageable changes may not solve every financial problem, but they can help you feel more in control.
- Practice self-care
Taking care of your mental and physical well-being is just as important as managing your finances. Self-care can help you build the resilience needed to handle financial stress. Engaging in regular physical activity, maintaining a healthy diet, and getting enough sleep are all essential for coping with stress.
Additionally, mindfulness practices such as meditation, yoga, or simply taking a few minutes a day to focus on deep breathing can help calm your mind and reduce feelings of anxiety. These small habits can provide a mental break from financial worries and keep you in a better headspace for managing money-related challenges.
- Communicate with your lender
If you’re falling behind on payments or can’t meet your financial obligations, don’t ignore the problem and reach out to your bank as soon as possible. Many financial institutions offer hardship programs that provide temporary relief through extensions or payment deferrals. By communicating with your bank early, you may be able to prevent late fees, penalties, or negative marks on your credit report, all of which can compound financial stress.
Remember, managing your finances is not just about crunching numbers—it’s about maintaining your mental and physical well-being along the way. Small, consistent efforts can make a big difference in reducing financial stress and improving your overall quality of life.
Auswide Bank Ltd AFSL and Australian Credit Licence 239686. This information provides general advice only. We do not provide advice based on any consideration of your personal objectives, needs or circumstances.
* If you require personal financial advice about your situation, we can refer you to Alliance Wealth Pty Ltd AFSL 449221 ABN 93 161 647 007 ('Alliance Wealth') for financial advice. For full details of our relationship with Alliance Wealth, please visit www.auswidebank.com.au/financialadvice
