Firstly what is Money Stress? Well at its simplest, it is you worrying about money. Some like to refer to it as those ‘keep you up at night’ moments that we all experience at some point or another.
Any type of stress especially when it’s about money can have a significant impact on a range of lifestyle areas, from your mental health, your relationships, your emotional state, your work, let alone the basics of paying the bills on time or stressing about how much you have in savings. Over 3.5 million dipping into their superannuation* during COVID showed how few of us were prepared with having an emergency nest egg.
So do the stats back this up? Well a recent AFR article AFR – Financial Stress for example had almost a third of Australians under financial stress (and other surveys have this number even higher), and more than half of under 35s face financial troubles. Americans rank finances as number one reason for stress, so this is just not an Australian issue.
One of the main reasons it is such an issue is we just don’t know enough about money. Seems strange to say when we deal with money every day, but simple money basics such as budgeting or savings, super, debt, compounding interest are just not taught at school. Or are just glossed over when it should be a subject on its own, as it is that important.
This is compounded (no pun intended) by that most Australians don’t like to talk about money either, especially if you are going through a period of money stress. Not with their friends, family or work colleagues. So many of us are ill equipped to know what to do or where to turn to for help. If this is you, there is help from financial advisers, coaches, and counsellors depending on your situation or how much help you need. It’s why in part I wrote my book The Money Sandwich, to help provide a low-cost, easy-to-understand guide to help with the most common money stress issues. As for many, some simple tweaking and planning is all that’s needed.
Here are my top 5 ways to help overcome ‘Money Stress’
1.List your money issues and make a plan
When speaking to people over the years who have had money stress or financial issues, most did not actually know exactly what the issues or problems were. Yes a lot of this is wanting to stick your head in the sand and hoping it goes away, but you need to act on these issues as soon as possible and not ignore them. Write down exactly what money problems you have, such as your credit cards being maxed out. Find out how much you owe and how much is needed each month to pay back. Just listing them seems to take a lot of the emotion out of it so do this critical step first.
2. Make a Plan
Once you know your money issues, make a plan to rectify these. You can rank the worst issues first and say plan to get the top 3 fixed in a year. Or others try ranking the smallest debts first, so you can pay them off quickly and get small wins early. Regardless, once you know what the problem is, you then need to work out how much you can afford to pay off each month and how long it will take to pay off these debts. Be realistic in how much you can afford or what you can do, and importantly if you now know what has caused this money stress in the first place, make sure you put in steps to not continue this issue (lock that credit card away for instance!).
3. Do a budget and build an emergency nest egg
It’s sometimes hard to know what you can financially do if you don’t know where the money is going each month. So listing what your income is and what you are spending it on each month is really helpful. Putting those expenses into categories such as essential (rent, petrol, groceries) or discretionary (take out, movies, coffee – yes I know coffee can be seen as essential!), can help give you back control of your money. Then looking at the discretionary list, is where you can make some changes to reduce your monthly spending.
Once you can see where you can reduce spending to help pay off debt, it is also important to build a safety net of 1 to 3 months salary in a savings account. This will be your emergency nest egg for when times are tough. Somewhere around 70% of working Australians do not have more than 1 month of savings for an emergency and we saw through COVID, how much stress that caused.
4. Be accountable, get help
We are all busy, and busy humans are terrible at sticking to plans, just look at how many of us break New Year Resolutions within 3 months. So you need to be held accountable just like turning up to meet your gym buddy each week. So you need a financial gym buddy so to speak, one that you can report to say once every 3 months, showing you are on track and keeping you accountable. Financial advisers or coaches are great for this but a close friend or family member would also work. I get it might be hard to speak to your friends or family about this, but good friends and family won’t judge and want to be there for you especially in times of trouble.
There are also unfortunately, some certain times when we realise we are just out of our depth, our income will never pay off the debt and under these circumstances, we just need to put our hand up for financial help. Again you are not on your own, and even realising this is your situation, is a positive rather than just ignoring it. There are ‘not for profit’ organisations who can help with debt assistance, and can help with setting a plan to stop creditors coming to your door. You can either go to my resources page where we list some organisations who can help or just go online and google, but please don’t ignore.
5. Be Positive
I understand it’s hard to be positive when having Money Stress and being kept up all night worrying, and I get that. Hopefully just by listing your money issues and making a plan will go a long way in helping demystify the issues, which when just in your head, late at night can become much bigger than what they really are.
Make some positive changes, and whether that is only looking at your money issues during daylight hours rather than before going to bed (amazing how this can help), or change the way you think about money. For example making positive statements, so that you go from ‘I can never pay off this debt’ to ‘I have a plan to pay off this debt’. Lastly, we will never get rid of ‘stress’ altogether but realising this and limiting how it can affect us is a positive or in some cases thinking of using stress to motivate us to do better.
*Source: Final costs of early release revealed, Investor Daily 2021
Article by Marc Bineham – Money coach, speaker and award-winning author of The Money Sandwich