Tips for reducing financial stress

Financial stress can potentially have a significant impact on your mental wellbeing, overall health and relationships.

According to a 2023 Compare the Market survey, personal finances and the ability to pay the bills were the number one cause of stress for 61% of Australians last year.

Financial stress could be a result of the rising cost of living, losing a job, being unable to find work, having debt, or having an illness or injury that affects you or your household’s earning power. Here are some strategies that may help you cope better with the stress of money worries.

Set a realistic budget and stick to it

A budget can help you track your income and expenses, identify areas where you can save money, and plan for your short-term and long-term goals. You can use online tools or apps to create and monitor your budget. Sometimes seeing it all written down can make it feel a bit more manageable.

Prioritise reducing your debts

Debt can be a major source of stress, especially if you have high-interest loans or credit cards. To help reduce the total amount of interest payable on your loan, you may consider paying more than the minimum amount each month and focus on clearing the debt with the highest interest rate first. You could also consider consolidating your debts into one loan with a lower interest rate.

Build an emergency fund for unexpected expenses

Having some savings set aside can help you cope with unforeseen events, such as a car breakdown, a medical bill, or a job loss. Ideally, it’s a good idea to have at least three to six months’ worth of living expenses in your emergency fund, but even a small amount can make a difference.

Protect your finances

Income Protection insurance can provide you with up to 70% of your monthly income if you are unable to work temporarily due to illness or injury. Total and Permanent Disability (TPD) insurance can provide you with a lump sum payment if you become totally and permanently disabled and are unable to work ever again. These types of insurance can help you cover living expenses, medical costs, and debts, and give you peace of mind that you and your family will be financially protected in a worst-case scenario.

Seek professional help

If you’re feeling overwhelmed by your financial situation, you don’t have to deal with it alone. I can help you assess your options and prepare a financial plan so you feel more in control of your future and can sleep peacefully at night.

Reference: The Top Causes of Stress | Compare the Market Accessed January 2024.

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.