The Australian Psychological Society says money is the leading cause of stress for Australians, with more than 50% of us fessing up to financial worry.
Considering the debts many of us are servicing such as car loans and mortgages, it is little wonder some of us are struggling to stay calm – though it seems we are still managing to carry on shopping.
Australians currently owe around $34 billion on credit — that’s an average of around $4,400 per card holder.
So are we living on plastic because of the high cost of living? Nope. The Reserve Bank of Australia (RBA) says that over the past decade incomes have generally risen by more than the cost of living across all income groups.
This means we’re actually better off now. According to the RBA, concerns about cost of living pressures might stem from household incomes remaining lower than many would like for the standard of living they can sustainably afford.
Put simply, we have unrealistically high expectations today. Our income has not risen as fast as our expectations so we can’t fund the lifestyle we now aspire to. And that gives rise to self-imposed stress.
But there are plenty of things we can do to ease the psychological burden. Here are seven simple ways to get rid of – or at least significantly reduce – your money blues.
- Decide right now to adopt a positive mental attitude. It’s easy to fall into the trap of feeling hopelessly beyond help with managing money. But it is so important to stop yourself from allowing negative thoughts to go around in circles in your mind.
Instead of telling yourself how hard things are and that you are trying your best and getting nowhere fast, change this mental chatter. Tell yourself that you have the intelligence and power to change things. You can do it and you will do it. Without a doubt, empowering thoughts set you on a more successful path.
- Consume less and quit keeping up with the Jones‘. Keeping up with the Jones’ is inherently stressful because it makes you focus on what you don’t have, rather than on what you do. From today, tell yourself this is going to stop. Really, do you need the latest gizmo just because it seems like everyone else has one? Constant upgrading is often unnecessary and usually wasteful.
Consuming less: sounds simple so why is it so hard to master? For many of us, it’s because we have become less conscious about our spending – so we need to work on raising our awareness, which brings me to the next point…
- Stop procrastinating and start tracking. The devil is in the detail when it comes to money – you need to know exactly where your money is going and the best way is to track spending. This means that from today you start keeping all your receipts – and yes, at first that may be hard, but you’ll soon get into the swing of it. As soon as you get home put your receipts into a shoe box or a jar – whatever works for you – then at the end of the week enter what you spent into an Excel spread sheet under gross headings. Do this for a few months and get a good grip on where you are spending.
- Consider where you are prepared to save and write it down. If you have been tracking spending, it’s now time to think about what areas you are prepared to cut back. For example, let’s say you buy a $20 bottle of wine every second night. That’s $60 a week or $3120 a year. Try some of the $10 clean skin bottles – you might not even notice the difference and you’d save $1560 over a year. For most of us there will always be areas where we can save – but only you can decide what’s so important that it has to stay and what’s less important and really could change.
Come up with three key areas to start with – print these goals out and stick them up somewhere you’re likely to see them every day. This is about learning to be more frugal – and there is no shame in that. Be proud that you’re being financially responsible.
- Draw up a spending plan. Also known as a budget, a spending plan helps you identify how much you intend to spend in every area. There is something about putting things down on paper that helps hold us accountable. It’s important that this is not a ‘set and forget’ document. Bring it to life by printing it out and reviewing it every month, at least. You might nominate an evening each month or each week for this task. In our house it is “Money Mondays”. Having a plan is empowering and emotionally uplifting.
- Slash bad debt. One of the biggest causes of stress is debt. Aim to pay your debts down first – and then look at what you have left over in your bank for spending and saving. Start by making extra payments onto whichever debt is charging the highest interest. Also consider consolidating all debt onto the lowest interest charging loan or credit card possible.
- Confess your financial sins. Finally, make an appointment with a money expert and confess your worries. As the saying goes, a problem shared is a problem halved. Talking to an expert rather than to family and friends is great because they have the skills to guide you effectively and tailor strategies that work for you as an individual. They can also help you plan holistically – so you’ll be thinking much broader than just a spending plan, you can also benefit from knowing more about insurances, estate planning, superannuation and other investments. As is the case with all relationships, the key to working with a financial planner lies in being totally honest. Don’t ever feel embarrassed because believe me, a professional financial planner has usually heard and seen it all. The more honest you are, the better placed they’ll be to help you achieve your goals.
*Claire Esmond is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.