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Financial mindfulness

Financial mindfulness

Financial mindfulness.

The term mindfulness is used a lot in relation to meditation and psychological therapies to describe being aware and paying attention. But what is financial mindfulness?

Financial mindfulness is simply described as having awareness and paying attention to your finances and financial behaviours. It means more than being money smart or financially savvy, as it includes the capacity to regulate emotional responses that can lead to unhelpful financial behaviour and financial stress.

It not necessarily about having a good financial position or good financial health, but an active process of being aware of and paying attention to your thoughts, feelings and financial behaviours in a way that is helpful.

Financial mindfulness is related to the term financial wellbeing, which is broadly defined as “satisfaction with your financial situation”. Financial mindfulness does include financial wellbeing, but also includes financial stress, their symptoms and behaviours.

Financial mindfulness is a practice that can lead you to financial wellness.  Wellness refers to the mindset formed from the way a person evaluates their finances and how it makes them feel. Mindfulness is the process of paying attention to your finances and taking appropriate positive action so that you can achieve financial wellness.

To summarise, 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.

Financial mindfulness helps you to focus on what you need to do, empowers you to make sound decisions, and ultimately invest in your financial wellbeing.

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Financial stress is widespread

Financial stress is widespread

Financial stress is widespread

Money worries are common. They existed before COVID-19 and now with changes in our employment and society, financial stress has become more widespread.

The Australian Psychological Society reports that financial stress is one of the major causes of stress in adults, and recently published research on the Financial Stress Index (FSI) from Financial Mindfulness, indicates an escalation of financial stress symptoms due to COVID-19 including negative impacts on relationships.

Financial stress is personal and impacts all areas of our lives. It is something we experience regarding our financial situation today or our financial future.

It also involves our thoughts about money and finances and what we do in terms of spending and saving, and how we manage our finances. 

Financial stress can arise during short term specific financial demands such as change in employment, or from a chronic and long-term financial concern, such as increasing debt with interest repayments or difficulty repaying a home mortgage.

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.

Some signs that financial stress is affecting your health, work and relationships include arguing with the people closest to you about money, becoming aggressive to others,  difficulty sleeping, feeling downhearted, overwhelmed, angry or fearful, mood swings, tiredness, loss of appetite, and withdrawing from others.

While these reactions affect your overall wellbeing, if they continue for a prolonged period of time, they could turn into serious health issues.  The important thing is to seek appropriate help.

People from all walks of life may experience problems with their finances at some stage in their lives. It is not something to feel embarrassed or ashamed about, especially as those feelings can stop people from getting the assistance they need.

Financial mindfulness means being aware and paying attention to your finances, and that may mean seeking help. The help required will vary from individuals. It may be practical financial support, or learning budgeting skills, or seeking assistance to manage the stress of money worries.

The first step to being financially aware is to determine how stressed you are by your finances. Our unique Financial Stress Index (FSI) designed by a team of Neuropsychologists and financial experts works out your financial stress levels and potential symptoms.

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Australians distressed and acting aggressively to others

Australians distressed and acting aggressively to others

Australians distressed and acting aggressively to others.

These are the findings from the latest Financial Mindfulness Financial Stress Index (FSI) report which has tracked financial stress in detail over the last 12 months and captured the impact from the COVID-19 pandemic.

An estimated 2.29 million Australians are experiencing levels of financial stress that reduce their wellbeing and capacity to function and it is dragging on the Australian economy.

The lost productivity costs Australian business an estimated $32.14 billion per annum. Key findings from the Financial Mindfulness FSI report during COVID-19* include:

      • 8.76x increase in people always acting “aggressively towards others because of my financial position”
      • There has been an 8.25x increase in those Distressed during COVID19 times from pre COVID-19
      • A 290% increase for always feeling isolated
      • 151% increase in those always finding it hard to ‘wind down’
      • Worry, feelings of tension and agitation increased
      • Increases in people who always or sometimes “experienced conflict with a loved one about money matters”.

The other key findings from the Financial Mindfulness FSI Report were:

      • A large proportion feel worried (89%), overwhelmed (79%), and downhearted (82%) about their financial situation
      • 69% of people say financial stress has negatively impacted their relationships
      • 64% experienced conflict with loved ones
      • 50% could not meet all of their weekly expenses
      • 77% of people are distracted because of financial concerns
      • 62% of people are having difficulty sleeping
      • 50% of people ate, drank, smoked more due to their financial situation.

“The Financial Stress Index (FSI) is a comprehensive measure of the financial factors and biopsychosocial consequences of financial stress developed by Financial Mindfulness,” says Dr Nicola Gates, Consultant Clinical Neuropsychologist at Financial Mindfulness.

“A worrying result has been the significant escalation of people always acting aggressively towards others and the negative impact on relationships in general.”

The company’s Founder and CEO, Andrew Fleming says “Financial stress was a significant problem before the COVID-19 pandemic, but we now can see the increased damage it is having on individuals and work productivity.”

“It is staggering to see how much financial stress is impacting mental and physical health, relationships and work.”

“We developed the Financial Stress Index (FSI) to understand financial stress at a granular level in order to build a solution. Our solution is the Financial Mindfulness App, a personalised program which reduces financial stress,” Fleming says.

The Financial Mindfulness FSI is a leading indicator on financial stress and will be reported every six months to measure changes in Australians’ financial stress levels.

*Data compares user responses in the periods August 2019 to February 2020, with March to August 2020.

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Contactless payments surge 44% during COVID-19

How can I improve my credit score

Credit card giant Mastercard reported a major shift in consumer behaviour that has seen 44% of Aussies decrease their use of cash when making purchases in-person since the outbreak of the coronavirus pandemic, as shoppers fear germs on cash.

The research found that more than half (52%) of Aussies are more aware of the dirtiness of cash as a result of COVID-19, while one in five (21%) said the risk of germs has made them not use cash at all.

Eight in ten (79%) of Australians agree contactless payments are a cleaner way to pay.

Founder and CEO of Financial Mindfulness Andrew Fleming said the combination of reduced incomes and a move away from using cash is the “perfect storm” for credit card debt which could drive up financial stress.

You can read the full article here.

From cash to cashless
From cash to cashless
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Perfect storm of credit card debt brewing for Australians during COVID-19

Essential Tips to Tackle Post Holiday Debt

Perfect storm of credit card debt brewing for Australians during COVID-19.

Rapidly falling incomes, a move to card-only payments and a complete avoidance of cash is creating a “perfect storm” for Australians to find themselves in deep financial ruin.

Andrew Fleming, CEO of financial stress busting app Financial Mindfullness, says many Australians are unaware of the debt they are getting into by relying solely on personal credit.

“There is almost one credit card for every adult Australian. In January 2020 just before the crisis, there was $42.6 billion owing on credit cards with $28.4 billion accruing interest,” explains Mr Fleming.

Read the full article here.

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Stressed about your finances or your mortgage

yahoo finance logo

Stressed about your finances or your mortgage.

Financial Mindfulness was covered in Yahoo Finance

Yahoo
Yahoo

If you’re experiencing financial stress, you’re dealing with two distinct issues: the money problems, and then the stress itself.

While Headspace has rolled out meditations specifically to help tackle financial stress, a new app has gone one step further to try and tackle both issues at once.

Developed with neuropsychologists, mindfulness and financial experts, the Financial Mindfulness app comes off the back of two years of research and aims to help people reduce financial, credit card and mortgage stress by addressing the way the stress itself is handled.

“The way we deal with particular stressors impacts everything that comes after,” said Financial Mindfulness founder and CEO Andrew Fleming.

Worrying obsessively with money can lead some to start seeing life as just keeping ahead of their financial problems. “Inevitably, that exhausts us.”

“When financial stress is reduced, we get some peace of mind, our relationships improve, and we are more engaged in our jobs.”

But can the Financial Mindfulness actually help me with my finances?

Just because the app is primarily aimed at tackling the ‘stress’ of financial stress doesn’t mean that app is light on financial guidance.

To improve users’ ease of mind and change habits, it uses a mix of financial literacy, goal-setting, and positive reinforcement to help develop new behaviours for better money management.

“Financial Mindfulness also has the ability to measure users levels of financial stress and then measure changes in those levels,” Fleming told Yahoo Finance.

“There has never been a solution available like this to ease the heavy burden of consumers’ financial stress.”

The app is available in the App Store and Google Play in both Australia and the US and offers two free learning modules: ‘Paying Bills’ and ‘Stress Management’.

You can access the rest of the modules, such as ‘Managing Credit Cards’, Managing Mortgages’ and ‘Unexpected Expenses’ for a one-off payment of $1.49 per module.

More than 20 modules are in the pipeline – expect to see ‘Managing Money in Relationships’, ‘Loss of Employment’, ‘Divorce & Separation’ and ‘Under-Earning’ before long.

Though the app only went to app stores this month, Fleming said user testing found financial stress was lowered after just one use of the app.

“Most users said their mood about personal finances also improved,” Fleming added.

“The users were intrigued because they’d never heard of a tool that addresses financial stress in this way.”

Published in Yahoo Finance on 6 September 2019. Credit: Chris Jessica Yun

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Power of Mindfulness over bad financial decision making

Using mindfulness

Power of Mindfulness over bad financial decision making.

If you’ve ever persisted with a dead-end job or loveless relationship or a university degree you regret starting in the hope it will somehow improve, or ‘chased your losses’ by doubling down, you might want to pay attention.

Maybe you’ve endured reading a novel you hated from the first 3 chapters or stayed through a movie just because you bought tickets – despite the fact you would rather be anywhere else.

Have you ever done something similar with money? Plunged money into a stock, a small business or tried your hand at Foreign Currency trading, something you didn’t understand? Hung onto that car for too long when it’s cost you a fortune already?

All these actions, and anything else where we ‘throw good money after bad’, are examples of a famous economic principle called the ‘sunk-cost fallacy’ which can be applied to life in general.

It’s the tendency to continue with an irrational and often risky course of action not based on the likely outcome, but because we don’t want to ‘waste’ what are unrecoverable costs and time – aka the ‘sunk-costs’.

It’s a very human response to the loss to try even harder to win, sometimes to avoid feelings of guilt or inadequacy, or even just fear of ‘looking bad’.

But at worst ego, politics and emotional decision-making can cause people to double or triple their financial losses, causing huge financial and emotional stress for individuals and their families.

In the cold light of day, it’s not rational, but who hasn’t done something like this? More importantly, how do we stop this apparent madness?

Researchers Andrew Hafenbrack, Zoe Kinias, and Sigal Barsade published their work, ‘Debiasing the Mind Through Meditation’, Mindfulness and the Sunk-Cost Bias in the Journal of Psychological Science in 2013.

In the research, the results suggest that increased mindfulness reduces the tendency to allow unrecoverable prior costs to influence current decisions.

“Meditation reduced how much people focused on the past and future, and this psychological shift led to less negative emotion,” Kinias wrote in the journal. “The reduced negative emotion [then] facilitated their ability to let go of sunk costs.” Mindfulness does have some power over bad financial decision making!

In another study, from Elsevier’s journal Personality and Individual Differences in 2007, found “mindfulness is associated with less severe gambling outcomes”.

Chad Lakey, Keith Campbell, Adam Goodie (University of Georgia) and Kirk Warren Brown (Virginia Commonwealth University) concluded their findings.

They wrote, “are hopeful in suggesting that the greater attention to and awareness of ongoing internal and external stimuli that characterizes mindfulness may represent an effective means of mitigating the impulsive and addictive responses and intemperate risk-attitudes of individuals with problem gambling.”

They concluded: “In this light, mindfulness may help to lessen the grip of automatic thoughts, affective reactions, and behaviour patterns.”

Research into the specific benefits of mindfulness is ongoing but it seems clear that a regular mindfulness practice can have powerful positive effects on dysfunctional decision-making around money and reduce financial stress.

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Shop till you Drop

Shop till you Drop

Shop till you Drop.

We are still on holidays, right? Well the majority of us are enjoying the holidays somewhere with our family and friends.  The hangover from Christmas and New Year is all but over, but one hangover that hasn’t left us is our credit card bill from Christmas and the so-called holiday ‘sales’, financial stress looms.

Chances are we still can be engaged in the frenzy of ‘The Stocktake SALE’, ‘The CLEARANCE SALE’, ‘Super Daily Deals’, ‘50 months interest free, no deposit, no interest (read full terms)’, ‘It’s the Season to SAVE BIG’, ‘After Christmas SALE and CLEARANCE’, etc.

That clever marketing pressure can flick a switch in our brains where we go into a kind of ‘trance’, handing over our credit cards, tapping away now in a cashless society on auto-pilot to suppress those logical thoughts of ‘we really shouldn’t be spending so much’.

According to BetaBait.com (a website helping start-ups connect with early adopters), 88 percent of the total impulse purchases are created primarily because the items are on sale.

Rather than purchasing useful or necessary items, impulse shoppers buy primarily because it puts them in a better mood. In addition, many impulse purchases are made because people feel that they can’t pass up an extremely attractive offer.  Retailers know this all too well and exploit it.

So, what do we do about it?

In a recent interview by Money and Life last month, I was asked to identify some helpful tips to break the cycle of spending and debt.

Dealing with the stress of debt and Christmas

BetaBait.com also found that when people shop with the purpose of buying immediate needs or forgotten items, the rate of compulsive buying falls by 53 percent.

Exactly how much do we spend on our credit cards?

The Australian Retailers Association expected Australians to spend $50 billion between mid-November and Christmas Eve. Aussie shoppers were tipped to spend a further $18 billion nationwide between Boxing Day and 15 January 2018.

According to ARA executive director, Russell Zimmerman, the jump is being driven by online retail. “With Amazon’s recent Australia launch, we are certain that online retail will be a driving force for post-Christmas sales with the ARA and Roy Morgan forecasting the ‘Other Retailing’ category to increase by more than four percent this year.”

Gumtree survey, which has found that Aussies are expecting to spend a staggering $10 billion dollars on Christmas presents alone, equating to more than $700 on gift giving per person.

Perhaps not surprisingly, the Gumtree research also found that almost 9 out of 10 Australians (86 percent) find Christmas puts a strain on their finances, with buying Christmas gifts dubbed as the biggest cause (66%) of this pressure.

The annual consumer survey by US company Statista found shoppers expected to spend an average of US6 on Christmas gifts alone in 2017, not counting other holiday costs and sales spending. This is a massive jump from the 2016 average of US$752.

In 2017, Christmas retail sales are forecast to grow to about 680.4 billion U.S. dollars; a 3.8 percent increase from 2016. Net result, Americans seem to be in a generous mood of giving more this year.  Does the Trump effect have anything to do with this?

In Australia, the Credit Card Debt Clock is ticking away and ticking upwards.  The MoneySmart clock shows how much Australians owe on credit cards. With around $32 billion owing, that’s an average of around $4,200 per cardholder. https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock

In the US, Americans have now hit a scary milestone, the highest credit card debt in U.S history.  According to the Federal Reserve, Americans had US$1.02 trillion in outstanding revolving credit in Oct 2017. When it comes to individual households, the average American family owes US$8,377.

For the first time since the Great Recession, lenders have given more consumers with sub-prime, or below average, credit scores, access to credit cards, but they are giving them lower spending limits, according to the credit reporting agency TransUnion.

So, what does this impulse spending all mean to our Financial Wellbeing

Answer: Financial Stress.

Financial Mindfulness conducted a survey on Financial Stress in Australia and found 1 in 3 Australians suffer Financial Stress.

The results of this press release appeared in the Sydney Morning Herald and the Financial Standard.

Marian Russell, one of Financial Mindfulness Facebook followers shared her personal experience on financial stress in the Sydney Morning Herald article.

New research is constantly being released on the impact financial stress is having on our financial wellbeing and general health worldwide.

According to the European Society of Cardiology, research recently presented at the 18th Annual Congress of the South African Heart Association, significant financial stress is associated with a 13-fold higher odds of having a heart attack.

So how can we get through the holidays not regretting our spending, not dreading the bloated repayments to come, then show up to work without that nagging sense of fear that comes from surviving with financial stress?

The answer lies in applying the principles of mindfulness – the proven practice of moment-by-moment awareness – to our finances. It means training our minds to slow down and make decisions that we won’t regret later.

An Australian start-up – Financial Mindfulness – is developing a financial stress reduction program designed to revolutionise the way we think and behave with our money. In the process, we can stay within our means and feel better about ourselves by saying goodbye to the worry of money.

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Financial stress behind mental health insurance claim spikes

financialmindfulness red Color

Financial stress behind mental health insurance claim spikes.

New research reveals that financial stress is a hidden mental health trigger for Australians to submit insurance claims, part of a trend alarming the life insurance industry.

The financial stress burden faced by Australians is, according to analysis by Rice Warner, a major factor in the escalating numbers of mental health-related claims that insurers are wrestling with.

In a report commissioned by an Australian start-up, Financial Mindfulness, to examine the viability of a program to reduce personal financial stress, it was estimated that well over half of mental health-related insurance claims are due to financial stress.

“It is not unreasonable to assume that 60 % of mental health claims have financial stress as a primary or secondary contributor,” Rice Warner consultant Heather Brown wrote.

Other research also commissioned by Financial Mindfulness in July 2017 found that Australians under financial stress suffered severe impacts on their mental and physical health and relationships.

While musculoskeletal conditions are the biggest category of claims for both IP and TPD claims, it is widely acknowledged that mental health is the fastest growing cause of insurance claims. Many agree because decades of stigma is lifting.

Rice Warner’s Group Insurance Claims Experience Study, a huge research project into 140,000 claims across 16 superannuation funds from 2011 to 2014, revealed another stunning finding, about the leading causes of IP claims in particular.

Mental health issues were the leading cause of IP claims during most Australian prime child rearing and career-building years (25 to 45 years). IP insurance premiums are worth an estimated $4.1 billion in annual premiums.

The types of insurance most affected by mental health claims are Total and Permanent Disability and Income Protection. 20% of all IP claims are due to mental health issues or suicide, while the figure was 15% for TPD.

According to Financial Mindfulness Founder and CEO, Andrew Fleming: “The trend of mental health insurance claims lead us to believe that this is the number one issue facing the life insurance industry.

What is the major reason behind mental health claims? Financial stress.

“Financial stress is having a major impact on Australians mental health.

Recently we announced our results from a detailed survey on Financial stress which highlighted the severity of the problem.”

More than one in three Australian’s surveyed (38%) worried about money “all the time”.

Those who identified as being financially stressed, said anxiety (66%), depression (64%) and social isolation (55%) were the consequences of financial stress.

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Financial stress devastating Australians

Financial stress devastating Australians

Financial stress devastating Australians, close to 1 in 3 Australians suffer from significant financial stress, which has for the first time been comprehensively examined in new research by CoreData.

The results show financial stress leads to anti-social behaviour, relationship conflict and breakdown, isolation, sleep loss and symptoms of depression.

Most of us are aware of financial stress; the phrase appears daily in media coverage of money issues. But how money worries diminish Australians’ quality of life hasn’t been fully understood – until now.

But how money worries diminish Australians’ quality of life hasn’t been fully understood – until now.

Australian start-up Financial Mindfulness commissioned global research firm CoreData in July 2017 to question 1000 Australians about what financial stress does to their relationships and their physical and physical and mental health.

CoreData dug deeper into the issue than anyone ever has in Australia, creating the first ever personal Financial Stress Index, based on responses to 17 questions.

The results show nearly one in three people (30.4%) are suffering from significant financial stress and they are struggling compared to those who are not financially-stressed. Women were more likely to be more financially-stressed than men (33.4% v 27.6%).

Dr Nicola Gates, chief scientific advisor for Financial Mindfulness, said significant financial stress was “a lot more common than I had believed”.
“Worse 80% of them report severe discomfort – psychological and physical discomfort as a result,” Dr Gates said. “Financial stress is an issue that needs to be talked about in order to reduce stigma and shame, and to bring about intervention.”

35 cent of respondents suffering financial stress admitted using drugs or alcohol to manage negative feelings associated with personal finances during the past month. That level of abuse was a remarkable 18 times higher than people not under financial stress.

More than 66 per cent of those suffering financial stress said money worries directly led to feelings of fear, anxiety and/or depression – three times higher than people unaffected by financial stress. “Financial stress, like other stress, is a significant threat to our mental health and can lead to mental illness,” Dr Gates said. “For example, financial stress can cause a person to feel shame and develop a sense of failure which may lead them to become depressed.”

One of the most surprising findings was that financial stress is felt broadly, and not only experienced in low-income households. Respondents on salaries of up to $150,000 a year with investments of up to $750,000 were only marginally less financially-stressed than those who earned up to $90,000 with investments of up to $350,000.The findings also showed that financially-stressed Australians reported:

  • Their physical health was affected nearly six times as much as those not financially stressed (60.8% v 10.5%).
  • Arguing about money with family/partner nearly four times as much (75.8% v 21.4%).
  • Feeling at least considerably irritable / having angry outbursts over their money twenty times more (52.2% v 2.6%).
  • Having problems sleeping at eight times the rate of those not financially stressed (71.3% v 8.7%).
  • More than a third (35.2%) used alcohol or drugs to deal with financial stress.
  • 52.4% have trouble concentrating (vs. 3.3%), 16 times higher.
  • 37.8% have been hurtful towards themselves or others, 17 times higher.
  • Nearly nine out of 10 (88.0%) avoid social functions reasonably often, four times higher.
  • Worrying about money “most of the time”, at six times the rate of those not stressed (71.0% v 11.7%)

The results of this press release appeared in the Sydney Morning Herald and the Financial Standard.

Financial stress devastating Australians
Marion Russell from North Narrabeen, Sydney