New research from Way Forward, the debt support charity, reveals that most Australians worry about money regardless of income and believe this anxiety leads to poor mental health.
Way Forward also warned that the burden of unmanageable debt - which has a significant effect on Australian mental health - has been worsened by the pandemic.
Of the respondents (76 percent) who worry about money all the time or regularly, a solid 86 percent feel the impacts on their mental health at least weekly, the survey found. What’s worse, from those who constantly worry about finances, 42 percent said their finances impact their mental health daily.
Despite high levels of worry and stress, most respondents - between 83 and 90 percent - are confident they can meet their financial obligations and gain control of their finances once they have a realistic repayment plan in place.
However, 61 percent did not know what they would do if their income was suddenly cut by a third.
This suggests that a realistic debt repayment plan and budget can provide confidence to someone in financial hardship, despite extremely challenging financial circumstances, according to Way Forward.
The data confirms that having a financial buffer can provide reprieve in an otherwise stressful situation.
Over 65 percent of respondents had less than $1,000 savings in the bank – an issue especially prominent among women, the report found.
RFi Group agrees that one of the biggest challenges Australians face with money management is ensuring they have enough money set aside for unexpected expenses and emergencies, followed by meeting their bills and recurring expenses and keeping up with and tracking their expenses.
“The pandemic has brought financial stress to many Australians, even among those with varying levels of personal income, and has made debt and savings a front of mind concern,” RFI said.
“Considering the low levels of understanding of banking and finance in the market, it is especially important to think about how consumers can be supported during the current climate of financial stress and how accessible these support measures are to people who need it.”
Lack of savings a trigger
The lack of savings can potentially trigger mental health issues as nearly all (95 percent) respondents with under $1,000 of savings either worry about money all the time or regularly.
Only 29 percent of those with over $5,000 in savings regularly worry over finances – suggesting that savings create an efficient barrier against financial stress.
Remarkably, the data revealed that people earning below $35,000 and between $150-$250,000 per year experienced the highest stress levels. The data indicate that all Australians tend to worry about money, and this does not lessen as one’s income increases.
“By investigating the lived experience of Way Forward clients, we found a high correlation between those experiencing financial hardship and poor mental health.” Said Way Forward chief executive David Berry.
“Financial hardship is a significant burden for many Australians and things are getting rockier with the successive waves of lockdowns. It’s time for the industry and legislators to acknowledge the severe impact of debt on mental health so we can work towards a path forward,” he said.
“While we thank financial institutions for supporting people through the pandemic, payment moratoriums cannot be the only support offered. A particular worry is the lack of support for unsecured debt – leaving many Australians to battle complex, bad debt on their own.”
RFI said initiatives and organisations that help Australians to pay off and manage their debt will be highly important, especially considering the mental health impact financial stress has on individuals and families.
Berry said the purpose of releasing the report on the mental toll of debt stress was to show Aussies struggling with debt to realise that they are not alone, and that help is available.