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Graduates arrive in their careers with financial stress

Uni students become more debt laden

Graduates arrive in their careers with financial stress.

Graduating from University is an exciting and rewarding experience.

The prospect of being in the field of your choice and apply those years of learning is one of hope and excitement, however there are elements of fear.

Fear of ‘will I be good enough?’, fear of performing to keep this new job, and the fear of the amount of student debt that needs to be repaid.

This last fear has only been increasing over recent decades.

Today Australian degrees cost between A$20,000 and A$40,000, but by 2026 the cost of the average three year degree in Australia will have swollen to over $A50,000; four year degrees, especially those from prestigious universities in high demand subjects would costs substantially more.

The current threshold at which graduates must begin to repay their loans (at four per cent per pay packet) is A$45,881 in 2019/20, roughly the median starting salary for an under-25 Australian resident bachelor’s degree graduate.

A law graduate could expect $55,000, a computer science grad $54,000, while an economics or accounting, psychology or veterinarian studies major both faced $50,000.

Overall, male graduate starting salaries were $55,000 and females were $53,000.

At present $1.9 billion is never repaid (because students fail to reach the repayment income threshold or move overseas) which is expected to grow to $4 billion by 2026.

A HECS-HELP loan, provided by the Government, is subject to interest rates based on the Consumer Price Index. The rate is currently 1.8 per cent.

With the size of student loans growing, the threshold for repayment dropping and work intensification showing no sign of slowing, it’s easy to see where this is headed.

Graduates seem certain to arrive in their careers burdened by financial stress, the single biggest cause of stress for Australians and Americans.

In the US the situation is much worse. Aggregate student debt is $1.5 trillion in 2020, up from $250 billion in 2004 according to the Brookings Institute. Student loans are now the second largest slice of household debt after mortgages, bigger than credit card debt.

About 42 million Americans (about one in every eight) have student loans. The size of this problem was a big issue in the 2020 US presidential campaign.

As students pour into the workforce with financial stress, this will only put more pressure on an already financially stressed workforce, the cost being wellbeing and lower work productivity.

What can be done to abate this growing issue comes down to companies recognising this problem and putting in place wellbeing programs to support its workforce.

The wellness programs offered by employers globally is growing, however it is coming from a low base.

Why has employers taking so long to implement wellness initiatives?

The reasons were highlighted in the Global Wellness Institute Report in 2016.

The range of reservations expressed by employers is wide and varied. A key one was the lack of proof that workplace wellness programs are cost-effective and contribute to company performance.

Financial Mindfulness has developed such a report via its Financial Stress Index (FSI).

The Founder & CEO of Financial Mindfulness says “the FSI measures and tracks employee financial stress for businesses to increase employee productivity and their financial wellbeing.”

“The FSI is used to compile the FSI Quantitative Assessment Report (FSI reports), a leading indicator on how and why financial stress is impacting employee productivity. The FSI and its reports were developed by leading Neuropsychologists, finance and data experts.

Measuring employee financial stress informs employers how, why and where financial stress is impacting on their employees, estimates the cost of lost productivity to their business and comes with suggested solutions.”

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Mindfulness can help you get in control of your spending

Mindfulness can help you get in control of your spending

Mindfulness can help you get in control of your spending.

Why do we spend money to feel good now, even if it’s obviously going to have negative consequences at some point, such as damaging financial stress.

And why do we seem to make better decisions if those decisions are planned and not impulsive?

The answer is complex, but just so you really get the ideas, first try to imagine yourself under a lot of financial stress. Maybe you are working and studying, and dealing with a worrying, ongoing health issue too – so you’re always flat-out busy, your mind feels ‘full’ and you have a sense of no end in sight.

Imagine how that stress feels in your body. It’s a difficult feeling, right?

Then without thinking, answer which of these options you’d pick:

  • buying two pairs of the same fancy shoes you like because they are in the window at your local mall or ordering them for 25 per cent less but having to wait a month.
  • selling your car today for $500 less than you could probably get because a buyer is ready with the cash and you want a weekend away or waiting for more money.

Many people probably favour the first option in each case because they want the ‘reward’ now.

Why? According to behavioural scientists, “present rewards are weighted more heavily than future ones. Once rewards are very distant in time, they cease to be valuable,” so says behavioraleconomics.com.

This was the finding of landmark research done in 2002 by Shane Frederick, George Loewenstein and Ted O’Donohue, and published in the Journal of Economic Literature.

Interestingly, when it’s not possible to be rewarded immediately, we will often wait longer to receive a greater reward. Research shows if given the choice between $100 in a year or $120 in 13 months, we are more likely to wait.

All this suggests when if we plan for the future, we are likely to make better decisions about money. But it depends what that future event is, and how far off it is.

If it’s a skiing holiday with friends in the Canadian Rockies next Christmas, we will probably start saving. But if it’s retirement at age 70 (as the Federal Government proposes from 2035), that feels somewhat less urgent, even though few would argue it’s more important than a skiing trip.

In a 2014 report on savings, the Reserve Bank of Australia showed “younger households place more weight on saving for large purchases and emergencies to smooth near-term consumption rather than saving for longer-term (retirement) consumption.”

“Some keys to managing decisions like these are to make those far-off outcomes feel closer,” Peter Sokol-Hessner, assistant professor in the department of psychology at University of Denver, The Huffington Post.

He suggested “to imagine how you’ll feel when you can use those retirement funds, how grateful you’ll be that your younger self sent this gift into the future.”

What has all this got to do with mindfulness?

Mindfulness is being fully aware of what’s happening in the present moment. When we can train our minds to be more aware of each moment – either through some kind of mindfulness practice like meditation, or just a deliberate change in mindset – we make better spending and saving decisions.

We can think about what we really need now, versus what we need in the future.

For instance, you may decide to do extra research before selling your car or home, looking more carefully at trends and brainstorming other ways to find ready cash.

A big benefit of becoming more mindful is it creates a buffer against the power of the external pressure to spend. Think about the hype involved around the release of the next stage of a sought-after apartment development: it’s in the interests of a real estate agent to get potential buyers into a feeding frenzy state with other potential buyers, so the stage sells out, the project can go up and the next stage goes into marketing overdrive.

“It’s not just real estate,” says Financial Mindfulness’s founder and CEO, Andrew Fleming.

“A lot of marketing works on the idea of scarcity and urgency, whether there’s only 100 in stock, or it’s a brand new order, or whatever. Think about new phones, new cars, something that is labelled ‘limited edition’.

“Marketing often works on us by getting us to make a decision before we’ve had a chance to think through all of the consequences.”

“Becoming more mindful will help you to buy things rather than be sold to. It’ll allow you to come from an understanding of your real needs, consider the consequences of your actions and respond by making decisions, rather than be manipulated by marketing.”

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Mindfulness to remain a key part of what it means to be human in the future

Mindfulness to remain a key part of what it means to be human in the future

Mindfulness to remain a key part of what it means to be human in the future.

While we look in awe at the videos of amazing robots coming out of labs worldwide on ever smarter smartphones, sceptics and academics are meanwhile busy wrestling with the real value of mindfulness.

A leading British expert has made a huge claim linking the two.

“Mindfulness may come to be seen as the core 21st century capacity, because it concerns our only competitive advantage over the machines: awareness itself,” wrote Jamie Bristow, director of the Mindfulness Initiative in the United Kingdom. The Initiative is an institute that lobbies politicians to include matters “of the heart and mind” in their policy decisions worldwide.

That’s right. We may actually have an edge over machines.

We have known for decades that machines have the potential to outperform humans in almost all areas of life. The World Economic Forum (WEF) concluded in a 2020 report that “a new generation of smart machines, fuelled by rapid advances in artificial intelligence (AI) and robotics, could potentially replace a large proportion of existing human jobs.”

In the next few years, 3% of jobs will be potentially automated by AI, according to PwC’s report “Will robots really steal our jobs?” Increased digitization resulting from COVID-19 may accelerate this trend. By the mid-2030s, as AI advances and becomes more autonomous, 30% of jobs and 44% of workers with low levels of education will be at risk of automation.

“Artificial intelligence and robots are not just challenging blue-collar jobs; they are starting to take over white-collar professions as well. Financial and sports reporters, online marketers, surgeons, anaesthesiologists, and financial analysts are already, wrote Business Insider’s Kathleen Elkins.

The ‘technological singularity’ is the name given usually given to the point at which artificial superintelligence sees machines ‘transcend’ human beings. Some experts in the area believe this will happen before 2045, although Google’s director of engineering, Ray Kurzweil thinks machines will match human intelligence by 2029.

A slightly newer take on the idea is that it’s not black and white, and that we are simply merging intelligence – a process that accelerates the more we rely on it. Think of our use of google maps instead of street map books of just 15 years ago.

So, as we merge with machines, what parts of us survive?

Writing for Mindful.org, Jamie Bristow pointed out that some of the world’s thought leaders are looking past inevitable explosion in AI and to how our innate humanity can solve problems robotics cannot.

One of the key issues put forward at the 2017 World Government Summit in Dubai was that “We need to develop 21st century job skills that cannot be replaced by robots and AI, which means exploring and cultivating what makes us uniquely human.”

Bristow alluded to the fact that plenty of parts of many jobs, such as being listened to by, for instance a GP, carry value beyond anything a machine could do.

In 2021, Bristow was more certain than ever than our innate humanity

‘As the ‘fourth industrial revolution’ advances, bringing with it increasing automation and escalating AI, it will be ever more necessary to retell our stories of purpose and value around qualities that are innately human,” he wrote in a recent paper, Mindfulness: Developing Agency in Urgent Times.

“Indeed, it has been suggested that we are entering the age of humanics rather than robotics: “an age that integrates our human and technological capacities to meet the global challenge of our time.”

A great example of this at play is how Big Tech is paving the way with the global roll-out of the COVID-19 vaccines. “Globally, we will be using everything from AI to machine learning, the Internet of Things, and blockchain to process huge amounts of data about vaccinations happening in real time, says Daniel Newman principal analyst of Futurum Research. And the data isn’t just about “shots in arms.” It’s about cold-chain traceability (proper storage), serial number verification, vehicle routing and geofencing of vaccine delivery, and more. It’s a supply chain problem at a massive scale.

Another key idea proposed at that summit, by Professor Klaus Schwab, founder of the World Economic Forum, was “new, human-centered thinking—considering happiness, wellbeing, purpose and meaning” in policy-making. Human happiness was also consistently near the top of the agenda, especially with mass unemployment a big possibility due to automation.

“It goes without saying that anything that we can do on autopilot, robots and AI will soon do better,” Bristow wrote.

Mindfulness could be a key, partly because it can be much more powerful than simply quieting the mind.

“Mindfulness practice is about more than just attention training. It’s also largely about developing kind curiosity towards inner experience, and provides a framework for deep inquiry into the psychological mechanisms of distress and wellbeing,” Bristow wrote.

In other words, when we observe thoughts without judgement we can see past our own insecurities and find it easier to empathise with others.

“This heightened empathy arises in part through the development of body awareness—as it turns out, the more we are grounded in the body and know stillness, the more we can feel moved,” wrote Bristow.

Psychologists who utilize mindfulness in their work might well add guilt and healthy shame to empathy on a list of things machines could mimic but would find it very difficult to do as naturally as humans. Could a machine that malfunctioned and injured its owner slow its output and produce extra reporting until it had regained trust?

If you consider financial stress too, it’s hard to imagine how machine learning can cope with the highly complex emotions involved in our dysfunctional and illogical behaviours with money – such as shame and remorse from things like gambling, impulse spending, or comfort-spending.

A mindful approach is inclined to accept the confusing, even contradictory and move forward purely based on empathy not only a focus on outcomes.

“Far from just another fad, perhaps the mindfulness craze is the start of a macro trend towards putting self-awareness and contemplative practice at the centre of human endeavour. Let’s hope so.”

It’s hard to argue with that – unless you are a super smart phone capable of understanding this on your own.

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Money doesn’t make you happy, but bad debt makes you sick

Money doesn’t make you happy, but bad debt makes you sick

Money doesn’t make you happy, but bad debt makes you sick.

You can’t buy happiness, goes the old saying. We also know that being in poverty decreases happiness, but instinctively we know having lots of money doesn’t guarantee happiness.

Research backs up the motherhood statement too. In a landmark study, Daniel Kahneman and Angus Deaton, of Princeton University found that after an income of US$75,000, earning more money does not increase happiness.

In 2010, the pair studied the survey responses of 450,000 Americans and found that “high income buys life satisfaction but not happiness”, aka emotional wellbeing.

Then in 2020, three Harvard researchers, Ashley Whillans, Lucía Macchia and Elizabeth Dunn looked at whether prioritising time over money left us happier than focusing on money over time by studying 1000 students graduating from the University of British Columbia.

In short, the students who aimed for money were less happy a year after they graduated than those who made time a priority.

It seems even more obvious that people with lots of debt are not happy, but the extent to which this is true is shocking.

In 2016, Australian investment advice company Acorns Grow Australia surveyed 1000 people and found 70 per cent suffered depression and anxiety because of their money worries, while 76 per cent had trouble sleeping for the same reason. More than half assigned physical health problems to money worries.

In 2013, University of Southampton researchers Thomas Richardson, Ronald Roberts and Peter Elliott found links between severe unsecured debts (such as credit card debt, student and personal loans) and poor health, especially mental health by reviewing 65 previous studies.

Those with unsecured debts were 3.24 times more likely to suffer “mental disorders” than those without unsecured debt and 2.77 times as likely to have depression. They were 2.68 times more likely to be problem drinkers but a scary 8.57 times as likely to be dependent on drugs. Sadly, people with debt are 7.9 times more likely to take their own lives.

Back to the Acorns survey results, a third of Australians aged between 25 and 44 had “abused” alcohol because of financial stress, while 20 per cent coped with money worries by using illegal drugs. It did not say how many turned to prescription drugs to manage.

“The majority of studies found that more severe debt is related to worse health,” the Southampton university team found. Their research was published in the Clinical Psychology Review.

Then there’s the phenomenon of ‘debt-anger’, in which instead of getting fearful about money, people in debt get very angry. By definition, the person affected becomes stressed, and can experience damage to their relationships, feelings of isolation and despair and even weaken one’s immune system.

Australia has world-leading levels of household debt according to most measures. When debt is taken as a percentage of net disposable income, Australia had the fifth highest debt per household out of 35 OECD nations, at nearly 210 per cent of net income, in 2020.

Australia was also the worst in the Asia-Pacific region, in relation to its household debt-to-GDP ratio, according to The Asian Banker website.

Even though most of Australia’s household debt is related to wealth creation or an asset, such as a home loan (the average mortgage debt is $350,000), well over a third of Australians (37 per cent) report they are struggling to repay their debt.

In various research the percentage of Americans struggling with debt is anywhere between 30 per cent and 70 per cent. Even the smaller number is a huge worry.

Citizens of both nations – and people throughout the so-called ‘first-world’ – repeatedly cite money worries as at or near the very top stressors in their lives in surveys and studies.

The Southampton university study didn’t go into which came first – poor mental health or money problems. But the links are clear and so is the message: heavy financial stress will either make you sick, or keep you that way.

The study also didn’t go into what to do about severe financial stress – but there’s plenty of advice out there. The traditional options include consolidating debt, budgeting and financial planning, or studying or working longer hours to try and land a more lucrative role. The latter approaches can come with their own problems: the stress that results from overwork and social disconnection.

One widely praised and usually inexpensive option is to be mindful about money. Mindfulness, defined by some as moment-by-moment awareness, helps to still the mind and improve messy and negative thinking. A huge amount of research worldwide has shown mindfulness positively affects a range of mental health issues including depression, anxiety, memory loss and sleeplessness.

If you are experiencing distress in your life and live in Australia call: Lifeline 131114, Mensline 1300 789 978 or Beyond Blue 1300 224 636; regarding debt problems, the National Debt Helpline may be of use on 1800 007 007.

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Financial stress a perennial reason couples split

In a sea of couple conflict, find stability

Financial stress a perennial reason couples split.

It’s February already and in a lot of relationships that means money worries will be to the fore.

It’s well known amongst lawyers that returning to work after the holidays brings up dissatisfaction amongst couples.

The pressure of being forced together more often, especially with the added burden of home-schooling during the pandemic, has only increased tension for many couples.

The first working Monday of the year is even known as “Divorce Day” by some lawyers because of the increase in enquiries about separation after the stress of Christmas and the New Year.

Dig a little deeper and you’ll see a correlation between that stress and the bills coming in following holiday spending. A lot of it is financial stress.

Money stress has long been a source of relationship pressure.

“Arguments about money is by far the top predictor of divorce,’ said Kansas City associate professor Sonya Britt, from the university’s family studies and human services program, in 2013.

“It’s not children, sex, in-laws or anything else. It’s money – for both men and women,”

Britt, who specialises in “financial conflict within relationships” ran a study of 4500 couples as part of America’s National Survey of Families and Households.

It was published in Family Relations, a journal of applied family studies. The study accounted for income, net worth and debt and found “it didn’t matter how much you made or how much you were worth.

“Arguments about money are the top predictor for divorce because it happens at all levels.”

Britt also found arguments about money took longer to resolve and recover from than other disagreements and used harsher language.

Her research seems to be backed up by people who sought information on relationship therapy in Australia.

An online survey of 2050 people who visited Relationships Australia’s website in late 2015 found nearly 85 per cent thought “financial problems were likely to push couples apart”. More than three quarters of the respondents were women.

This was a big increase on the last time the counselling provider surveyed web visitors on money issues, in 2011. Back then 71 per cent thought money dramas could split couples.

The survey drilled further into why money worries might lead to separation – and the answers were varied. But several of the main causes related to stress; 25 per cent thought financial problems caused “too much stress”, while another 15 per cent answered: “a lot of people can’t cope with the stress”.

Nineteen per cent said money troubles “caused fights” and 12 per cent said such issues “caused blame”.

But the biggest single reason cited in the survey was the more diplomatic “people have different priorities/expectations”, which is another way of saying people disagree about money – presumably how much is enough, as well as how to spend and /or save it.

One finding in particular from the survey showed how mixed up couples are about money: around three quarters of female respondents reported that their male partner managed finances, exactly the reverse of how male respondents answered the question.

In other words, while everybody seems to think they are in charge of the money, nobody seems to be communicating well about finances.

This was backed up by a different set of questions Relationships Australia asked respondents in 2019 – the degree to which couples discussed finances.

Prior to making a commitment to their current of most recent partner, 56% of survey respondents reported they had not discussed how they would manage their couple finances if one of them no longer had an income.

A significant majority of women (74%) and men (69%) reported they had not discussed how they would divide their finances if their relationship ended.

“A mindful approach to money is without doubt a more successful one and a key to living mindfully is being able to accept reality for what it is – good, bad or neutral,” said Andrew Fleming, CEO/Founder of Financial Mindfulness.

It’s not a great leap to see that this can stretch to couples keeping secrets from each other about their finances.

“When we can accept reality, we can admit where we are at with money, not be so intimidated by it and we can discuss financial problems within relationships too.”

“That takes a lot of stress out of relationships, and everyone benefits from that.”

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Using Mindfulness practice to help reduce financial stress

Financial freedom

Using Mindfulness practice to help reduce financial stress.

Mindfulness has been a big buzzword for several years.

The cabin-fever worry of the COVID pandemic reinvigorated mindfulness as a solution too. Mental health organisations, major news outlets, universities and of course meditation programs  were discussing the merits of mindfulness as a way to deal with COVID stress.

In recent years, mindfulness stress-reduction programs have emerged as a key plank in corporate wellness programs too – the new gym-at-work, except for the mind.

Mindfulness programs, run by external trainers and delivered in-house to stressed-out employees are in hot demand as employers seek to curtail the impacts of a big range of lifestyle and mental health issues that lead to costly absenteeism and its sneakier sibling, presenteeism.

There is little doubt mindfulness practices – which range from yoga to tai chi and the most popular recently, mindfulness meditation – work.

Researchers for the American Psychological Association, Daphne Davis and Jeffrey Hayes found many clear benefits from a broad review of prior research into mindfulness.

Davis and Hayes’ 2012 practice review What Are the Benefits of Mindfulness? A Practice Review of Psychotherapy-Related Research, found mindfulness “decreases rumination” (or ‘over-thinking’), improves memory, reduces anxiety and depression symptoms, people to become “less reactive” and more flexible in their thinking.

People who meditate were found to be better at “self-observation” and could adapt better to “stressful and negative situations” and concentrate better after receiving “upsetting stimuli”.

But the issues that worry us enough to interrupt our work and sleep are so mind-bogglingly varied that general, one-size-fits-all mindfulness programs could conceivably frustrate us as we are encouraged to gradually become more mindful across every areaof life.

Wouldn’t it make more sense to apply targeted mindfulness practice to one or two areas of life? Maybe the ones that stress you out the most?

Think about that: don’t we need distinct mindsets to resolve relationship issues, compared to say, problem-solving our career stagnation, compared to finding the calm and patience to cope with a major health scare or crisis, compared to the action needed to reign in our ballooning credit card debts?

One of the biggest issues stressing out employees is something not often associated with mindfulness meditation: financial stress.

The American Psychological Association’s Stress in Americansurveys consistently report high rates of financial stress. In 2020 it found that 73 per cent of Americans with a household income of under $50,000 reported money was a significant source of stress.

It’s not a one-off result. 73 per cent of all Americans rank their finances as the No. 1 stress in life, according to new Capital One CreditWise survey.

Another survey by Thriving Wallet, a project backed by Arianna Huffington’s Thrive Global and Discover, found that 90 per cent of Americans said financial considerations have an impact on their stress levels

In Australia, it is estimated at least 2.44 million people are suffering financial stress, with about a quarter of women in financial stress, compared to 14 per cent of men.

The numbers come from AMP’s 2019 Financial Wellness report, which found that financial stress has affects more than personal lives.

“While many people think money worries are a personal issue, our research shows being financially stressed spills into your working life, increasing absenteeism and impacting productivity,” said AMP Director of Workplace Super, Ilaine Anderson.

The report estimated that financial stress costs businesses $31.2 billion a year in lost revenue.

While one solution AMP suggested was financial goal-setting, given the amount of distress and discomfort money causes us, could there be other answers too? What if mindfulness practice could dramatically change not only the way we view our money problems, but lead us to concrete actions that solve some of them?

Andrew Fleming, Founder of Financial Mindfulness,says mindfulness practice can help with obvious but hard-to-control problems like overspending in two ways. The first is to help you stop re-living the kind of fantasy in which it’s somehow okay to continue living beyond your means.

“You become more aware of the situation not as you want it to be, but as it really is,” he says.

“The second thing it does is to create calmness, less emotional reactivity and a balanced mind, so you can deal with the ups and downs of life. Then you are better equipped to deal with whatever situations you face, with calm focus and clarity.”

So mindfulness may not directly improve your financial circumstances, at least not straight away, but it is capable of quickly reducing the pressure you feel about money – which is by definition your sense of financial stress.

Fleming says practicing techniques like meditation can go further too, putting you in a frame of mind to find solutions to stubborn problems with their personal finances.

“Most people from when they wake up to when their head hits the pillow mind are constantly switched on, moving from task to task to task all day long. When the mind is constantly switched on, it’s inevitable stress will occur.

“Mindfulness is a maintenance tool to help develop clarity of thought to create space in the mind for new ideas and innovations, new ways of changing or improving current circumstances.”

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Financial stress and under-earning

Financial stress and under-earning

Financial stress and under-earning.

When people think about answers to financial stress a lot of energy and attention is paid to our spending. Where does all our money go, we are urged to ask of ourselves and our partners.

The implication is clear: if we suffer financial stress we share a flaw – impulsive and sometimes reckless spending. We can easily go straight to the conclusion that we are over-spenders, who use spending to numb out boredom and difficult emotions. We might even think we are greedy.

For some people, sadly, those are harsh truths. But just as many people try with all their willpower and attention to detail and live within their means, and cannot seem to make ends meet. For many people, a polar opposite problem to over-spending applies under-earning.

Earning less than your skills suggests it wouldn’t be a major problem if it wasn’t so damn expensive to live; so huge numbers of people are driven into debt.

It isn’t cheap to live in Australia, especially in a capital city like Sydney.

According to Numbeo (the world’s largest cost of living database), the cost of living in Australia is 17.6% higher than in the United States. In fact, it’s cheaper to live in countries such as France, United Kingdom, Germany and Canada.

US households on average carry US$145,000 (A$187,400) in debt, according to the personal finance website The Ascent. In Australia the figure is even higher, skyrocketing beyond A$250,000. Much of those debts are mortgage repayments, an essential cost and also an investment in our futures.

But what about credit card debt? In the US, the average credit card debt per household is US$7,000 according to nerdwallet.com, while the average American with a student loan owes $56,000 and the average car loan is $27,000.

Card debt is lower in Australia, around A$2500 per cardholder, while car loans are slightly higher here.

It’s not yet known what the average debts owed to credit services like Afterpay and ZipMoney are as they are too new, but the national bill in Australia is thought to be over $1 billion.

“Many people believe that card and personal loan debts come from heedless spending, and to get out of debt you have to stop buying luxuries and living a lifestyle beyond your means,” says Andrew Fleming, Founder and CEO of Financial Mindfulness.

These assumptions are often wrong he says. “Often people use cards, credit services and loans because their incomes don’t match their expenses, especially when an unexpected expense comes along,” he says.

In most western economies it is well known that the cost of living – let alone the price of major life expenses like property – has outpaced inflation and wages for many years.

One answer to how we cope with going back even when we have the best of intentions is to confront the issue raised near the start of this article: under-earning.

But beyond a state, most of us find difficult, even shameful to talk about, what is under-earning, exactly?

First, it’s useful to identify what under-earning is not.

Barbara Stanny, author of Overcoming Underearning: A Five Step Plan for a Richer Life wrote in Forbes in 2011 that an under-earner is not someone who chooses a low income or a simpler life without much work.

“It is always a CONDITION OF DEPRIVATION[sic] not just of money, but of time, joy, freedom, choices and self-esteem,” Stanny wrote.

Under-earners are often drowning in debt and vague about money, she wrote. They might even have an “anti-money attitude”, unwittingly sabotage their own career prospects and underestimate their value at work. Often they are also co-dependent (meaning they put others’ needs ahead of their own).

Under-earning is a chronic condition that’s not going to be fixed in a day, let alone by reading an article, but awareness of it can start to break decades-long negative cycles.

People work through deep-seated issues like using anything from various forms of therapy to mindfulness practice.

The latter approach can help alleviate financial stresses and strains at two levels. “Mindfulness practice won’t necessarily change your earnings,” says Andrew Fleming.

“But it will give you a new awareness of what you are doing and help change your approach to what and how you spend and what you earn.”

He says regular mindfulness practice will help people clearly see the reality of their situation, “instead of being stuck … with your mind racing 100 miles an hour” – and will give you the calm to deal with it.

And you’ll need that calmness because negative, even painful feelings are likely to come out of seeing the realities behind your financial stress.

“Frustration and discomfort can be a sign of a breakthrough, a new awareness,” Fleming says.

“It might help you take action, perhaps asking for a pay rise and being confident when doing so, having an authentic conversation with the boss or it might put you into gear to pursue a better-paid vocation, either within the same company, the same industry or by doing something totally new.”

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Why women suffer more from financial stress

Mindfulness and the Sunk Cost Bias

Why women suffer more from financial stress.

Recent studies have found women feeling considerably more financially stressed than men – but why?

In the United States, a recent study of 10,500 employeesby Salary Finance, found more than half of women born between 1981 and 1996 (millennials) are worried about not having enough to retire. In comparison a third of millennial men have the same beliefs.

The study found similar disparities between men and women in Generation X: 44.8 percent of women born between 1965 and 1980 are worried about money issues most or all of the time, while 36.1 percent of men feel the same.

In Australia, NAB’s Australian Wellbeing reportshowed financial anxiety rose, probably due to coronavirus, in 2020. Women were more worried than men.

According to the research women were more worried than men about raising money in a hurry for an emergency, children’s education and rent or mortgage costs.

The most fearful group of all were women over 65.

It’s been happening for years. Back in 2014, the Australian Psychological Society reported “personal financial issues” were a major source of stress for 53 per cent of women but only 44 per cent of men. The APS found three main causes of stress amongst Australians (in order) were personal finance, family issues and personal health.

AMP’s study found the main financial stressors in people’s lives are (in this order), bad debts, home loans, retirement, supporting the family and budgeting.

In the United States, Californian company Financial Finesse found 55 per cent of mothers earning less than US$60,000 reported “high” or “overwhelming” levels of financial stress. Male parents of a similar age group and income level were 40 per cent less likely to feel as bad.

While there are often only small discrepancies between men and women around financial values and stressors, women almost always report more negative feelings about money, even if only marginally.

One explanation for women’s financial stress is historical and current pay inequity. On average Australian women in fulltime work earn 17.3 per cent less than men ($277.70) according to the Workplace Gender Equality Agency. That gap has “hovered between 15% and 19% for the past two decades”.

In the US, the difference is starker: women on average are paid a third less.

At the same time, women traditionally have had more responsibility for the day-to-day running of the home, such as domestic duties and childcare. In recent times though, generally speaking, women’s involvement in financial decision-making – and sharing costs – in relationships has increased.

One could speculate shouldering more financial responsibility while still earning less and doing more than men at home might be a factor in women’s higher levels of financial stress. There is also evidence that risky behaviours with money, such as impulse spending, are linked to feelings of stress, guilt, boredom and anger.

The problem with financial stress is that it does not just impact our finances, it can have a significant effect on our wellbeing including our physical and mental health along with our relationships, work, behaviour and potentially our environment.

Seeking help around our finances and feelings of financial stress eventually becomes essential.

The help required will vary for individuals. It may be practical financial support, or learning budgeting skills, or seeking assistance to manage the stress of money worries.

One solution for some sufferers of financial stress is to become financially mindful.

Financial mindfulness, is an active process of paying attention to your finances, financial behaviours, attitudes and beliefs around finances. It is keeping awareness of your thoughts, feelings, actions and financial environment in mind so that you can make better financial choices.

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The 10 biggest barriers to peace of mind in 2021

biggest barriers to peace of mind in 2021

Call it what you will, peace of mind, inner peace, sanity, contentment, serenity – that feeling of freedom from when your brain just won’t shut up and in bad moments you feel only marginally less negative about the world and others than you do about yourself.

In a world full of fear about the pandemic, your job, financial stress, the planet, walking home late at night, whether your kids are safe, the next interest rate rise or maybe that secret we pray never sees the light of day, most of would rather spend time with a sustained, quiet satisfaction than on a speedboat with champagne and celebrities.

It’s a different feeling from ‘happiness’ – though most of want that too.

Happiness is great but in truth it is usually a passing state, although certainly one to be grateful for. Nobody is happy all the time and if they claim to be, well, good luck to them. Contentment or peace of mind is true freedom. So how do we break the chains that hold us back from freedom of the mind in 2021? Here are some ideas.

Worrying excessively about Covid

By this we don’t mean to say it’s not a real thing, actually, quite the opposite. When we accept the evidence of reliable and dour scientists and public health experts and just do what they suggest, the surprising effect is we have less to worry about. That’s because we are not fighting it anymore – and fighting is very often based in worry and fear.

We suggest keeping yourself, your family and your workplaces as Covid-safe as reasonably possible, doing what is asked by authorities – and outside of that, concentrate on living your life. Make your time count for and with those that matter.

Too much screen time

If scrolling through Facebook a few times each day, or news websites, makes you feel connected, or if you have Netflix and just wanna chill, good for you, do it. But if you do it again, and again (and again), sorry to break it to you, but you are not living a healthy life. Period. And as for social media being sociable? Give me a break, Facebook is about as ‘social’ as a phone plan “cap” that somehow makes you spend more.

When used for a specific task, with time limits, social media can be fun and creative but used unconsciously and habitually it is empty, pretend connection. Hit the X on that tab and go get some real face-time with friends, or write someone a letter. If they are across oceans, ring them up to talk and if you can, start saving to go see them.

Putting up with financial stress

No, we are not about to suggest some wealth maximisation (aka get-rich quick) scheme. We are suggesting that continuing to live with worries about money is going to make you sick and/or keep you that way.

Financial stress is the biggest stressor for people in the United States and Australia, and as yet, employers aren’t doing much about that – although that is sure to change as corporate wellbeing programs catch up. In the meantime, do something about your low financial literacy, learn how to keep and stick to a budget, learn how to be mindful with money.

Do something about your fears over money. Be grateful for what you already have rather than always wanting more. Try to stop spending money you don’t actually have yet with too-easy tools like Afterpay or ‘pay-on-demand’. If you really need more money, then take some action: study, look for a different job and if you have the time maybe do some more work in the evenings or at weekends.

Comparing yourself to others

When did this very human trait ever work out really well? Everybody has a bad day and sometimes everyone just looks fitter, richer, like they have more friends or are just more ‘together’. They might be, but they may have very serious problems you cannot see on the surface.

You might see someone worse off and feel grateful, but deep down you may also feel a bit empty from witnessing someone else’s suffering. And why were you comparing in the first place? Perhaps from a lingering sense ‘is this all there is’? Stop distracting yourself from your own life and try practicing gratitude every day.

It’s not hard it just takes commitment. Write a gratitude list. World famous monk David Steindl-Rast suggests we can only be happy when we are grateful and we can do this by reflecting on the valuable things in life that we have been given – not things we paid for or earned. Watch his wonderful TED Talk on gratitude here.

Caring too much about others

Kindness is a really nice quality at face value, we need more of it in the world. But if you secretly wish you didn’t have to do so much for others, or expect something in return for your good deeds you may be just be avoiding the difficult reality of your life and even co-dependent.

Co-dependence is a word similar to the phrase ‘Global Warming’, in that it sounds much friendlier than what it actually is. Global warming is really dangerous climate instability, which is a bit more than feeling cosy in winter. Co-dependence is adjusting your behaviours to please others, no matter the cost to your wellbeing.

People who think co-dependence is healthy are usually thinking of interdependence. “The healthiest way we can interact with those close to us,” according to Barton Goldsmith of Psychology Today, “is by being truly interdependent. This is where two people, both strong individuals, are involved with each other but without sacrificing themselves or compromising their values.”

Being busy, staying busy

If you need something done, as the saying goes, ask a busy person. While you’re at it, give them a gold star but whatever you do, just don’t ask them how their mental health is. If you are busy all the time, what is all that white noise doing inside your head? Do you feel calm, at peace? Never forget you are a human being not a human doing.

Busy-ness can feed anxiety, that nagging chatter in your brain that undermines your self-esteem. You need to stop, at least once a day, take stock, and rest with your own thoughts. Try mindfulness meditation as a way of learning to still the mind and accept your thoughts without judgement.

From that you may learn it’s ok to be still and that you are still valuable – perhaps even more valuable – if you don’t do quite so much. You’ll probably be easier to be around too.

Staying in a job where you don’t want to excel

Maybe it’s because you aren’t respected, the boss just cut staff numbers, or froze wages again but parks his new sports car in the basement. Maybe you are doing law or medicine or IT because you think it makes your parents happy.

Whatever the reason, you feel resentful at work but you stay anyway, usually because you think financially you are trapped, or that a career change would disrupt your life too much.

But getting stuck in a job you hate is a slow death of the soul, one that invariably impacts on your mood and can lead to acting out with (or internalising) anger or with impulse spending or even addiction.

Plus you just may be holding yourself back from a bright new chapter in your life. How will you ever know if you don’t try? At least allow yourself to dream or brainstorm what might make you a happier person.

Treat your grudge like a tiny kitten

Who isn’t angry deep down about someone who harmed them in some way? Not everyone, sure, but a lot of people. If you get into a pattern of almost protecting that grudge every day, even nurturing it, guess what – it’s going to grow.

After a while you’ve held it so close that you begin showing it off, like an 8 year old with new roller skates. A resentment is not a pet, it’s a poison. Ever heard the saying ‘holding a resentment is like drinking poison and expecting someone else to get sick?’

It kinda is. Take action to deal with your resentment, work out your part in it, talk to them with a will to build bridges. And remember honesty without compassion is cruelty, or at least an invitation to an argument.

Doing nothing if you know you have a problem

You know what I’m talking about. That anger you hold, your unprocessed grief, your money problems (whether spending too much, ‘under-earning’ or just ignoring finances), your pattern of bad relationships, your secret addiction or unhealthy behaviour.

In recent years , Prince Harry has come out about the effect hiding his sadness about the effect of Princess Diana. “I can safely say that losing my mum at the age of 12, and therefore shutting down all of my emotions for the last 20 years, has had a quite serious effect on not only my personal life but my work as well,” London’s Telegraph reported Harry as saying.

Nobody is perfect or strong enough to deal with life’s train wrecks on their own. Pretending to be fine is going to stop working at some point, perhaps disastrously. But then what? Don’t waste any more time, start right away. There are different price points for counselling and support groups for all kinds of life issues from eating disorders to post-traumatic stress.

No matter what you think of yourself deep down, you deserve help. Imagine someone saying you didn’t deserve help – how would you react? So step outside your own head and go help that person – you.

Accepting reality

We touched on it above a few times: ignoring and resisting problems actually causes more grief and suffering than facing them.

That’s easy to say when it’s not us having that excruciating conversation, such as asking your lender for a hardship variation on your mortgage, or laying out the facts to the boss who doesn’t like you why you really do deserve a raise, or admitting to your partner that you haven’t been entirely honest.

Yes, uncomfortable conversations are difficult and painful. Especially when they are with ourselves. That might include actually following through to construct a budget and seeing the source of your financial problems.

But after the conversation is over, you have the beginnings of new, much healthier behaviours and habits. Yes, you have to follow through and things might get harder before they get easier, but you no longer be need to be burdened the solvable problems.

You just need to get moving and do something, beginning with the smallest of steps. The most important of those is to get real. Pretending that truly unsustainable situations – whether emotionally, financially, mentally or physically are fine and don’t need to change will just cause you unnecessary pain and drama.

Being real can sometimes hurt a bit, but as a way of thinking and understanding the world it’s both a relief and an effective change to make.

If you are experiencing distress in your life and live in Australia call: Lifeline 131114, Mensline 1300789978 or Beyond Blue 1300224636; regarding debt problems, the National Debt Helpline may be of use on 180 0007 007 , or go here for a list of hotline numbers relating to different crises.

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Six great New Year’s Resolutions to improve your finances in 2021

Six great New Year’s Resolutions to improve your finances in 2021

Six great New Year’s Resolutions to improve your finances in 2021.

These days we know there is a correlation between our financial wellbeing and our general wellbeing. We know that toxic levels of financial stress impacts us in many different ways, it affects our relationships, our self-esteem, our social life, our productivity at work, even our physical health.

That’s why it’s appropriate to set New Year’s Resolutions for our finances — and also our related behaviours.

There’s every chance 2021 will be another tough year with COVID still a major problem, with businesses under pressure, unemployment a big worry and a wide range of ongoing social impacts.

Uncertainty and fear only add to the unavoidable problems presented by the pandemic: we still need to have positive goals and intentions for 2021, then deal with what happens as it happens.

Here are some suggestions to help you kick off 2021 in a positive way.

BECOME SELF-AWARE OF YOUR FINANCIAL POSITION

A great way to break through the murkiness of money problems is to answer some simple no-nonsense questions. Even if it’s a little scary, you should be clearer afterwards and probably more motivated too.

  1. Are your savings going up or down? What direction are your finances are headed in?
  2. Have you had trouble paying basic bills and/or making normal repayments?
  3. What are your financial goals?
  4. Do you fully understand your finances?
  5. Are you ok with being in the same position financially a year from now? Five years from now?
  6. Do you ever feel distracted because of your finances, including during work hours?
  7. How often do you spend money on things you don’t need and/or aren’t healthy for you? When did I last do this? How many times in the past month has this happened?
  8. Are you financially healthy but feel stressed and/or down about it anyway? Why is that?
  9. Do you ever experience conflict or feel anger because of your finances?
  10. What steps are you taking to address your financial issues? If none, what is holding you back?

Spend at least 30 minutes on this and try to share the answers with someone you trust, and also put your answers into a journal so you can refer to them later.

TRACK YOUR SPENDING

“Spend less, save more” is on just about everyone’s list of New Year’s Resolutions, ever year. It’s a great goal, but a more specific objective that will help you work towards that goal is to carefully track all your spending – on a daily basis. Use an app, or write it down on paper – whichever suits you best.

Do it for a week, then a month. Clear patterns will emerge which will help you to keep a realistic budget. Keep doing it – this is one of the best habits anyone who feels financial stress can build.

REDUCE THE NOISE

There are just too many distractions in the world today. To have any hope of living more mindfully, and sustaining financial resilience and overall wellbeing, we need to reduce the white noise in life. Here are some suggestions:

  • Reduce your social media use. Cut back and make the time you spend on social media more meaningful. For example, congratulate friends on life events and achievements instead of getting dragged into debates.Post pictures and stories of something you are proud of. If you really struggle with social media, turn off notifications and set digital wellbeing timers.
  • Be wary of online news. There’s an old saying that still holds true in the news business: if it bleeds, it leads. News organisations have a vested interest in bad news and scandals and that cannot be good for anyone’s state of mind.Be aware of that before you click: news sites count on a natural human curiosity to witness dramatic events.
  • Plan your distractions. It’s ok to switch off and escape mentally for a while, in fact it’s essential with the pressures in life. Plan ahead for how to ‘escape’ and make an agreement with yourself to eliminate or minimise unhealthy behaviours and stick to your limits.For example, watching a movie or two episodes of your favourite Netflix show is very different from bingeing until 2am. Try one glass of wine on a Friday instead of two each night. Listen to a podcast on a walk instead of snacking.
  • Monitor and reduce screen use. Are you seeing far more human faces on screens than in person? Does your screen use feel compulsive? Do you wish you could turn something off but can’t seem to?Do you have blurred vision, neck pain, headaches, irritability and trouble sleeping? These are all signs of excessive screen time.
  • Don’t reply to everyone. It was true of email 10 years ago and it’s true of all forms of digital communication today. We are not saying ignore people in need, but answer what you have to. You can’t always please everyone.
  • Aim for 5 minutes of complete silence each day. No screens, no music, no audio at all, no talking. Yes, it’s an old-fashioned idea but just try: it’s powerful. In that 5 minutes notice how your body feels.

UNDERSTAND WHAT YOU CANNOT CHANGE

Resisting or trying to control things that are not in our direct control is the cause of a lot of human misery. What does this have to do with financial resilience? A lot of people spend money to change the way they – or someone else – feels.

Understanding what you can’t change takes practice. Give this a try: can you actually change the fact that COVID is still in play and affecting your suburb and your company? Of course not.

Here are some other things you also cannot directly change:

  • Other people’s opinions and decisions;
  • Other people’s behaviours, including their flaws, habits and problems;
  • Final decisions and rulings made by companies, and governments;
  • The job market;
  • The housing or rental market;
  • The cost of buying anything;
  • Money that has already been spent; and
  • Debts that have been fairly accrued.

What do you think you have been trying to change that is actually beyond your direct control?

Here’s a list of things that we can change (even if it is difficult to do so):

  • Our own decisions and opinions;
  • Our own behaviours and how we react (including good and bad habits);
  • How we spend our time;
  • Our loneliness, including any tendency to repeat our mistakes (we can ask for help);
  • What we spend our money on;
  • Our level of savings and the direction of our finances;
  • Our financial literacy;
  • Debts that have been unfairly/illegally accrued

TAKE HAVING FUN MORE SERIOUSLY

True, it seems counter-intuitive to be “serious” about fun. What we really mean is to make having fun a priority. There is some science that shows how important fun is:

  • It improves relationships;
  • It relaxes and makes us more confident;
  • It is good for our health – reducing potentially harmful hormones like cortisol and noradrenalin and improving our immune system response;
  • Fun invariably leads to laughter, which also has a host of positive physiological affects including raising mood;
  • It improves satisfaction levels at home and in the workplace.

So how do we have more fun? Try thinking of fun as “play”.

Play isn’t just important for children, though it’s often best with children. Play with your kids, get down on the ground with them – inside or outside. In their fort, in the dirt. It’s good for everyone involved.

If you don’t have kids, play with your dog. If you don’t have a dog, sing bad 80s music at the top of your lungs, jump in the ocean regularly, rediscover things you loved doing as a teenager. Push yourself out of your comfort zone a little, perhaps with dancing, or taking up a craft or hobby that sounds enjoyable to you.

Gentle exercise, especially when shared with others, is often good fun. It doesn’t have to be competitive – that’s a personal decision: some people find competition fun, some don’t. Go with your gut.

Whatever you do for fun, make it regular – at least once a week.

MAKE SELF-CARE A DAILY HABIT

Self-care is being written about here, there and everywhere for a reason: it’s not just a cliché or a passing fad. It’s a very broad term to cover the actions that keep your mind and body healthy. Here are 12 suggestions for valuable self-care that anyone can do:

  1. Face up to basic responsibilities, like booking doctors and dentist appointments;
  2. Keep your receipts for tax time. Your self-esteem will grow, and you will feel more in control;
  3. Exercise at least 3 times a week, even if you can’t face high-intensity activity. Just go for long walks;
  4. Don’t eat mindlessly, think about your food. Avoid huge servings, especially late at night. Eat more vegetables than processed foods. Sugary snacks and drinks are not your friends! They are bad for your teeth and lead to weight gain;
  5. Go to bed on time and at the same time each night. 7-8 hours’ sleep is about right, less or more might affect your health;
  6. Do a quick mindfulness exercise each day. Guided meditations are easiest and often free on YouTube or apps;
  7. Get out of your own head by helping others;
  8. Always have something to look forward to a holiday, a dinner, a movie, a concert, especially something that ‘makes the heart sing’;
  9. Find a community you identify with – separate from work and family connect with them at least once a week;
  10. Reach out to trusted friends when you feel lonely. It’s never a burden to hear from a friend expressing their vulnerability, it actually builds trust;
  11. Set aside an hour each week for honest self-reflection: look at your progress with your finances and on your goals, assess your self-care and bad habits, estimate your screen time. Are you having enough fun? Or too much? Are you wrestling with things you can’t change? Record these facts, thoughts and feelings in the same place each week.
  12. Don’t forget to be positive, grateful and kind to yourself!

SET GOALS FOR 2021

Just setting a few modest goals can have positive impacts on our mental wellbeing, as well as the more obvious benefits that come from even partially achieving them.

It’s important to not overwhelm your list with a ‘to-do’ list aimed at transforming every area of your life. That is a recipe for beating yourself up. But you should put some thought and some detail into the few that you do come up with.

The SMART acronym – Specific, Measurable, Achievable (or Action-oriented), Realistic (or Relevant) and Timely – is a popular, effective and useful tool for goal setting.

Here are some steps for goal setting:

  1. Reflect on what you have learnt from 2020;
  2. Reflect on what worked well for you in 2020;
  3. Try to remember what your goals were this time last year – are they still relevant?;
  4. Think about what story you’d love to tell about your life at the end of 2021;
  5. Brainstorm 6-10 ideas for goals, some hard, some easy;
  6. Trim that list back to 3-4 that feel right and/or really important (don’t pick the 3-4 most difficult!);
  7. Apply the SMART acronym to each; and
  8. For long-term goals, make sure you break them down into smaller goals, e.g. “To save $20,000 and invest” can’t be achieved quickly for someone on an average income. For most people it would only be possible with a series of smaller goals, such as:
    1. Calculate how much you need to save each week to reach your savings goal;
    2. Make a realistic budget of all your expenses;
    3. Work out how much income you need each week to reach the savings goal;
    4. Adjust the savings target if necessary;
    5. Evaluate your progress after 1 week, 3 and 6 weeks. Make necessary adjustments; and
    6. Seek help and advice on investment options.

Some general tips on goal-setting:

  • Goals work best when they are clear and specific;
  • Having several highly ambitious goals is probably not realistic;
  • Having at least one challenging goal has positives and negatives, but produce better overall results than having only modest goals;
  • Goals need to be reviewed regularly and adjusted accordingly; and
  • When you evaluate your progress and find you are on track, give yourself a modest reward, but not one that undermines your efforts so far.