It might sound clique, but financial worries really can keep you awake at night, and what’s worse affect your marriage or relationship, your ability to work productively and overall health and wellbeing.
A new report has revealed that Australians’ confidence in their finances has been on a downward trend over the past two years, with Australian working women faring worse than their male counterparts when it comes to financial stress.
The AMP Financial Wellness Report showed that 30 per cent of employed women surveyed said they experienced financial stress, compared to only 19 per cent of men.
Both women and men say the most common triggers for their stress are bad debt (50 per cent of stressed workers), the need to save for retirement (35 per cent) and providing for their family (34 per cent).
Missing bill payments and making mortgage repayments also contribute to higher levels of financial stress for many financially stressed employees.
Generally, having goals can make a real difference in preventing and overcoming your financial stress. People who have clearly defined goals – no matter how big or small – will be much more likely to be financially secure.
However, for many people grappling with where to even start with getting their finances in order and learning how to save towards these goals is the hardest part.
Here is a simple five step-plan which can help you make a positive move towards restoring your financial confidence and put you on the road to recovery from financial stress:
Start a spending plan. Rather than think of it as a ‘budget’ think positive and come up with a spending plan for your income. Without this plan there’s no way of knowing how much is left over at the end of the week or month to spend, save or go towards paying off debt. This will help you see where over-spending might be occurring and, therefore, where savings can be made. You’ll be surprised how even small lifestyle changes, such as taking lunch to work or cutting back on coffee purchases, can save you hundreds of dollars over a year.
Build up some emergency savings. Start using these savings to build up an emergency fund which will alleviate financial stress simply by having the peace of mind you can cover small unexpected expenses that always crop up along the way. Set up separate accounts for savings (including your emergency contingency) and spending – this will also help with keeping up with bill payments and household expenses.
Pay off bad debts. Once the savings fund is in place, start redirecting a portion of your savings to ‘bad’ non-deductible debt, such as credit cards, personal loans and home mortgages. If you have several credit cards consider consolidating them, which will help to reduce fees and charges, not to mention being easier to keep track of spending. Think about rolling any non-deductible debt into your home loan as this will usually have the lower interest rate.
Set your goals. It’s always easier to be a disciplined saver when you have goals to reach. Only 18 per cent of employees surveyed in the AMP Financial Wellness report said they had a defined plan to achieve their goals. Think about your specific goals and then start using the extra cashflow across these goals, such as paying off the mortgage, saving for annual holidays or making extra contributions into your super.
Re-visit your spending plan and goals. It’s important to regularly keep tabs on your overall spending and where you are at with your goals. This will help keep you focussed and disciplined on achieving your goals – and seek help from a financial adviser if you’re finding it difficult being accountable to yourself.
*Jenny Cattach of Cattach & Cattach 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.
