Dealing with financial stress

Conclusion 

Financial stress can feel overwhelming, but with the right strategies and support, it’s manageable. Start by identifying your stressors, taking proactive steps to address them, and reaching out to available resources. Remember, you’re not alone in this journey, help is always available to guide you toward a more secure and stress-free financial future. 

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Financial stress is a common issue affecting millions of Australians. With household debt averaging $276,000 as of 2021/22, many individuals face challenges in managing their finances, which can lead to emotional, physical, and mental health struggles.  

Many Australians list personal finances as their main cause of stress. Not having enough money, or having financial instability, creates stress and uncertainty that can negatively impact your life.  

More than that, having disposable income to spend on leisure activities, hobbies, and your health and wellness can benefit your mental health. So there’s a lot to gain from financial stability and a lot to lose once it goes away. 

This blog aims to provide practical guidance, resources, and reassurance to those navigating financial stress. 

What is financial stress? 

Financial stress occurs when an individual feels overwhelmed by their financial situation. It’s often linked to: 

• Rising debt or unexpected expenses. 
• Job loss or reduced income. 
• Inadequate savings or emergency funds. 

This type of stress can impact physical health (e.G., Sleep issues, fatigue), mental health (e.G., Anxiety, depression), and relationships, making it a critical issue to address. 

What are the triggers of financial stress?

It can be difficult to process the loss of financial stability. You may experience:

• Overwhelming confusion. You may feel like it came out of nowhere or may not have been able to guess how it would actually feel to lose financial stability.
• Conflicting emotions. You will feel a lot of feelings as you process the loss. Your emotions may change quickly and conflict with each other. For example, you might feel betrayed by people who let you down and guilty for letting down people who rely on you. Or feeling confident in your work while feeling your confidence has been rocked.
• Unanswered questions. Losing a job or financial stability can feel like a fundamental pillar of your life has changed. It can make you question other aspects of your life. It can raise questions like ‘Who am I?’ and ‘Is this the right career for me?.’

Financial Stress and Depression. The Impacts on Mental Health

A 2020 research briefing by the Australian Council of Social Services says financial instability is significantly associated with poor mental health. Financial instability can come in many forms. It can include unemployment, casual employment, inadequate income, poverty, medical bills, bankruptcy, personal debt, and unmanageable student loan repayments, to name a few. When bills and debts spiral out of control, an ongoing state of fear, anxiety, and uncertainty can corrode your mental health.

Types of Financial Loss

There are many types of financial loss.

1. Losing your job

You can lose your job for many different reasons. Generally, people lose their jobs due to their workplace restructuring or fundamentally changing. Sometimes people may be let go in response to wide-scale economic downturns.

Occasionally, people lose their jobs due to unfortunate errors or not meeting the terms of their contracts. Whatever the reason, losing your job is incredibly difficult.

2. Unemployment

Ongoing unemployment can happen when you are looking for work but struggle to find a new job. Sometimes people will choose to take time off between jobs and while this is also classified as unemployment, it’s not quite the same as involuntary unemployment. Ongoing involuntary unemployment comes with its own challenges, such as the stress of job interviews and the stigma of seeking financial aid.

3. Bankruptcy

Choosing to declare bankruptcy can be an incredibly stressful decision. In 2018 alone, 32,000 Australians filed for bankruptcy. There’s no minimum amount of debt needed to file for bankruptcy so it can happen to anyone with any level of debt. And while bankruptcy may offer a way out of impossible financial situations, it’s not a get-out-of-debt-free card. There are serious legal, social, and emotional knock-on effects that arise from declaring bankruptcy.

4. Poverty

Poverty is the state of not having enough. Poverty does not necessarily mean you aren’t working. Sometimes you can earn money but still not have enough to cover your material needs. In Australia, living in poverty is more common than you might realise. According to APO (APO_Poverty in Australia 2020), one in eight adults and one in six children (13.6% of the total population) live below the poverty line. The government payments for Newstart, Age Pension, and Youth Allowance all fall below the poverty line.

Financial Stress Symptoms

When you are under financial stress, you might start to notice the effect of financial stress both physically and emotionally. The signs of financial stress may include:

• Frustrated and short-tempered
• Loss of appetite
• Sleep disturbances
• Tiredness and apathy
• Sore muscles
• Mood swings
• The need to withdraw from social events
• Lowered sex drive
• Memory loss and confusion
• Ruminating on the past

What are the triggers of financial stress? 

It can be difficult to process the loss of financial stability. You may experience: 

Overwhelming confusion. You may feel like it came out of nowhere or may not have been able to guess how it would actually feel to lose financial stability. 

Conflicting emotions. You will feel a lot of feelings as you process the loss. Your emotions may change quickly and conflict with each other. For example, you might feel betrayed by people who let you down and guilty for letting down people who rely on you. Or feeling confident in your work while feeling your confidence has been rocked. 

Unanswered questions. Losing a job or financial stability can feel like a fundamental pillar of your life has changed. It can make you question other aspects of your life. It can raise questions like ‘Who am I?’ and ‘Is this the right career for me?.’ 

Some common causes of financial stress 

Understanding the root causes of financial stress can help in tackling it effectively. Common triggers include: 

• Unemployment or job insecurity: A major driver of financial instability. 
• Rising cost of living: housing, groceries, and utility costs continue to increase. 
• Debt accumulation: credit cards, personal loans, and mortgages can compound financial worries. 
• Unexpected expenses: medical emergencies or car repairs can strain budgets. 
• Gambling or poor financial habits: risky behaviors that exacerbate financial problems. 

Signs of financial stress 

It’s essential to recognise the signs early to mitigate the impact. These may include: 

• Difficulty sleeping or concentrating. 
• Constant worry or feeling overwhelmed. 
• Strained relationships due to money issues. 
• Avoidance of financial responsibilities like paying bills. 

11 Tips for Dealing with Financial Stress

If you’re going through financial stress, you may want to consider the following tips:

• Acknowledge your situation. Allow yourself to feel the full spectrum of feelings and experiences of grief. Financial insecurity is incredibly difficult to experience. Forcing yourself to be stoic or always hold it together can make it even harder to process grief and loss.
• Know what you’re entitled to. If you’ve been let go, check the Fair Entitlements Guarantee (FEG) to make sure you’ve received fair entitlements from your workplace.
• Create a new routine. Losing your job can also mean losing your routine and sense of purpose. Even though you don’t need to get up for work, you can still set the alarm, enjoy the morning and be ready for your day. You might want to use this period to make time for activities you enjoy or set yourself a schedule of learning or chores. Any structure will help you to feel more normal as you process your new circumstances.
• Plan ahead. If you suspect or know you’re going to be let go, make a plan and think about how to use the redundancy payment. This may give you more sense of control over the situation and you may feel less shock when and if you are let go.
• Reduce your spending. Take control of your spending and figure out where you can make cuts. Often when you have a stable income, you pay less attention to small amounts of money. But these small sums can add up if you can redirect them to smart purchasing choices.
• Budget. Once you understand your expenses and where your money is being spent, you can make a budget. Contact your local council, as many councils have financial counsellors who can actively work with you in putting together a budget.
• Look after your health. Exercise and getting enough sleep are things you can do (for free!) to help yourself through difficult periods.
• Contact your bank. Your bank can help you rearrange your debts and help you manage repayments.
• Contact your super. At the same time, contact your superannuation fund about options or how to reorganise your funds to suit you.
• Contact financial services. Contact charity organisations and the Department of Human Services Financial Information Services in Australia, or the equivalent internationally, for support and advice.
• Sign up for financial support. If you’re in Australia, make an appointment at Centrelink to discuss unemployment benefits.

For more strategies to cope with grief, please follow the link here.

Further external resources for financial and emotional support 

• For urgent help with money: Money Smart
• For urgent help with debt: National Debt Helpline
• For COVID-19 financial assistance: Money Smart
• For mental health and financial stability: Head to Health