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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
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Employees want help with their financial stress

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Employees want help with their financial stress.

Does it strike you as strange that the biggest stressor we face isn’t talked about in plans offered to help with our stress?

In recent years employers have recognised the personal stresses experienced by staff can affect productivity and the bottom line, due partly to the sheer amount of our lives we spend at work and no doubt partly due to increased workloads.

In response, workplace ‘wellness’ programs are everywhere these days, especially in large companies – acknowledging the impact of unhappy staff on the bottom line.

Now there’s evidence from the United States that workplace wellness programs might be missing the mark but not addressing one of the biggest causes of issues in the personal lives of workers – their personal finances.

A new online survey of 511 American employees, done in mid-April by Four Seasons Financial Education, found people wanted financial stress addressed in their corporate wellness plan but 70 per cent of those whose company did offer something said assistance on personal finances was not included.
It’s not just in the US that this mismatch is happening.

Financial wellness is not commonly an element in corporate wellness programs in Australian workplaces either.

Corporate wellness programs have longed focused largely on physical wellbeing, so they offer health checks, fitness classes, nutrition, massage and team bonding. Few look at mental health, although mental health problems are experienced by a huge number of people.

According to the Australian Psychological Society, 26 per cent of Australians report having “moderate to extremely severe depression symptoms”.

Metlife Australia’s 2016 Employee Benefits Trends study showed the top three concerns employees had were related to mental health: work-life balance, depression and anxiety, and stress.

“Only a small proportion of employers recognise work-life balance, depression and stress as important health issues for staff,” the report found.

According to AMP’s Financial Wellness Report, based on interviews with 2000 employees in 2016, 24 per cent of employees feel financial stress. While there is no suggestion personal finance issues create mental health issues for everyone, there is undoubtedly a correlation.

While some new generation wellness programs branch into stress testing, yoga and meditation as a way of combating stress, few acknowledge the importance of improving mental health or drill down to examine the leading causes of stress for workers.

The Australian Psychological Society’s 2015 Stress and wellbeing report, which came from online interviews with 1731 Australians, found : “[Personal] financial issues are rated as the top cause of stress over the five years, while also of concern is the increase in the number of people turning to gambling to manage stress (now one in five).”

Furthermore, the report concluded: “31% of employees say they have taken unexpected time off to deal with a financial issue and 41% admit being distracted at work because of financial worries.” The study surveyed 300 managers and 500 fulltime employees.

One of the report’s four calls to action was “Win minds and hearts by encouraging emotional and financial wellness.”

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Good mental health a much bigger factor in happiness than money

Using mindfulness

Good mental health a much bigger factor in happiness than money.

Earlier this week Norway was named the happiest nation on earth, by the United Nations researchers, just ahead of Denmark.

Northern European countries dominated, with Iceland, Finland, the Netherlands and Sweden also in the top 10; perhaps there really is something to the saying ‘cold hands, warm heart’.

Australia rated 9th happiest, the United States was 14th and the United Kingdom 19th.

The bottom five places were filled by Rwanda, Syria, Tanzania, Burundi and the Central African Republic.

Why should we care about something that might be considered frivolous compared to harder-headed indicators like economic growth, interest rates and GDP? Because the world is changing and economics no longer rules unchallenged.

As the report points out: “In June 2016 the OECD committed itself ‘to redefine the growth narrative to put people’s well-being at the center of governments’ efforts’. Norway came first, it is pointed out, despite weak oil prices. The nation depends heavily on oil and gas resources, but in recent years has sunk profits from those industries into a transparent, ethical, future fund.

The UN team behind ‘The World Happiness Report’ used data from telephone and face-to-face interviews conducted by Gallup with around 1000 people from 155 countries over three years (2014-2016). Respondents were asked to rate their life on a scale of 0-10.

A key chapter of a report, ‘The Key Determinants of Happiness and Misery’, included some fascinating insights for companies, policy-makers and individuals interested in what makes us happy and unhappy, and how we can go from one state to the other.

The chapter focused on deeper research done in four countries: the US, UK, Australia and Indonesia.

“In all three Western societies, diagnosed mental illness emerges as more important than income, employment or physical illness.” The reverse was true in Indonesia, although in all four countries mental illnesses were more significant to our happiness and misery than physical illnesses.

The research found our levels of income and education per se weren’t major factors in happiness. Our tendency to compare ourselves with others in these areas was a bigger problem.

“Household income per head explains under 2% of the variance of happiness in any country,” the authors wrote. “Moreover it is largely relative income that matters, so as countries have become richer, many have failed to experience any increase in their average happiness. A similar problem relates to education—people care largely about their education relative to that of others.

“In all countries the most powerful [improvements to misery] would come from the elimination of depression and anxiety disorders, which are the main form of mental illness. This would also be the least costly way of reducing misery.”

The report made no mention of financial stress as a factor in misery experienced by adults, but it is worth pointing out that research shows clear links between money worries and those major mental health issues, anxiety and depression.

In 2013, researchers from the University of Southampton found people with unsecured debt (such as credit card debt, student and personal loans) were 3.24 times more likely to suffer “mental disorders” than those without unsecured debt and 2.77 times as likely to have depression. Tragically they were 7.9 times more likely to take their own lives.

It is no surprise then that the World Happiness Report’s researchers found addressing the emotional health of children was more important to set someone up for a happy life than academic qualifications. A child’s experiences at school were found to be more important than their test scores.

“What in turn affects the emotional health and behaviour of the child? Parental income is a good predictor of a child’s academic qualifications (as is well known), but it is a much weaker predictor of the child’s emotional health and behaviour.

The best predictor of these is the mental health of the child’s mother.” Disappointingly for dads, researchers found a father’s mental health wasn’t as important in determining happiness and misery as a mother’s.

Again, the report made no mention of mindfulness – this wasn’t the work to go into the array of potential solutions.

But with mental health such a huge factor in determining the happiness or misery of people in the US, UK and Australia, and other research showing money worries are linked with anxiety and depression, mindfulness around money is without doubt one important and useful tool in the search for happiness.

Through many years, Norway has been rated one of the happiest countries in the world
Through many years, Norway has been rated one of the happiest countries in the world
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When mindfulness might not work

Australian employees want mental health at work taken seriously

When mindfulness might not work.

Unless you’ve been living under a rock you will know the word ‘mindfulness’ has quite a buzz about it.

CEOs are into it, so are talk show hosts, pop stars, famous actors, sports stars and lately it’s being rolled out in corporate wellness programs for thousands of stressed-out employees.

There are some compelling reasons why this is happening: a mountain of scientific research over the past two decades shows mindfulness practice has positive effects on a range of mental health issues and may even improve self-esteem and help people cope more effectively with stress.

But as a recent Australian Financial Review article pointed out, mindfulness is no magic pill. The newspaper ran a story based on a study of 189 men, aged on average 70-71 years with advanced prostate cancer, some of whom were exposed to mindfulness-based cognitive therapy over the phone for eight weeks. The Griffith University study was published in the American Journal of Clinical Oncology.

One of the study’s co-authors, Suzanne K. Chambers, found: “mindfulness-based cognitive therapy did not improve the men’s well-being in comparison to their usual medical management… [furthermore the men it did not affect any] reduction in psychological distress [or] lessening of anxiety about testing for prostate specific antigen – a measure of tumour progression and response to treatment – and [or] lowering of distress related to their cancer.

“Men receiving [mindfulness] therapy also reported no improvement in quality of life nor post-traumatic growth, a term that encompasses positive psychological change as a result of their cancer.”

Chambers and Queensland Cancer Council CEO Jeff Dunn, in a co-authored article for theconversation.com did however acknowledge the study participants found mindfulness “helpful in terms of not feeling alone, learning meditation and breathing exercises, understanding the meaning of well-being and perceived control of thoughts and health.”

Dunn and Chambers did also acknowledge other research had shown mindfulness had positive affects in relation to cancer – a study of 325 women found “some evidence for the effectiveness of [mindfulness-based stress reduction programs” in improving psychological health in breast cancer patients”. The results were published in the October 2012 issue of the journal Current Oncology. They also acknowledged “influential health organisations” in the United States and the United Kingdom saw fit to recommend mindfulness as a tool to manage chronic illness.

It could be argued a mindfulness study based on terminally ill men in their 70s says little about how a younger physically healthy audience could benefit from mindfulness. But regardless, the principle it highlights is worthwhile: if facing reality won’t help your life in the long run, then mindfulness might not be for you.

Marc Richardson, a Sydney-based psychologist with Financial Mindfulness, who also works in private practice, said the results of the Griffith University study were “not surprising”.

“Any kind of denial these men, in the advanced stages of prostate cancer, were holding on to might be stripped away by mindfulness. It seems almost unkind to try and get them out of denial.”

Richardson added that people with serious mental illnesses, such as dissociative or psychotic disorders or those facing gravely stressful life events, should seek advice from a trained psychologist before embarking on a course of mindfulness.

Mindfulness could help a great many other people though, Richardson said, especially people facing financial stress – which is a leading cause of stress in the western world.

“Mindfulness gives people stressed about money a chance to slow down their thinking, ground themselves and an opportunity for a new perspective,” he said.

“When we are in an anxious state trying to perceive things clearly or to manage situations effectively is very difficult – we can get stuck ruminating on negative thoughts.

“Something about mindfulness acts as a circuit breaker and allow us time to slow down and rethink our position, potentially allowing us to then take more effective actions.”

A terminal illness is probably not the only limitation on mindfulness either. If you expect mindfulness to remove problems in your life you may be disappointed.

So let’s make a few things clear: sadly mindfulness will not make cancer go away. It also won’t get you a speedboat and it won’t make people like you if they didn’t before. It won’t make you a mind-reader and it won’t give you the patience of a saint. But if you do 20 minutes of mindfulness meditation every day, your thinking will probably become measurably clearer.

What you do with better cognitive processing is up to you.

It’s entirely possible that with cleaner, healthier thinking you could write a piece of music or even a book, start a business, learn to really listen to others, or even just finish or resolve something that has been a ‘block’ in your life for years.

It could also contribute to you stopping behaviours that would otherwise lead to serious illnesses – and let’s be clear, this is not a comment on the causes of prostate cancer, which are thought to be partly genetic, partly lifestyle.

So mindfulness is not be for everyone. But neither is swimming, playing a musical instrument, yoga or gardening – and few would argue those activities are not beneficial, let alone that they should be avoided.

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Can’t afford a comfortable retirement

Retirement Orange

Can’t afford a comfortable retirement.

A huge 47 per cent of Australians between 26 and 64 – 6.1 million people – are not likely to have enough money, even accounting for superannuation, assets and the aged pension, to maintain a “comfortable standard of living” in retirement.

That’s according to CommBank’s ‘Retire Ready Index’, which is compiled using data from 10 million Australians’ superannuation accounts and Australian Bureau of Statistics’ data on personal wealth.

On the flip-side, 53 per cent of people in the same age bracket should have enough for a comfortable retirement, although that figure drops alarmingly to just 17 per cent if the aged pension were not available.

Although there are no signs the aged pension is under threat, there are fears about its long-term sustainability, especially after then-assistant Australian Federal treasurer Kelly O’Dwyer claimed in 2016 that the “objective behind the superannuation system” was for people to not rely on the pension.

The pricetag for a “comfortable” retirement, according to figures released last September by the Association of Superannuation Funds of Australia, is $43,372 a year for singles and $59,619 for couples.

Having enough money to budget these amounts each year from age 67 (from 2023 that will be the age at which Australians qualify for the pension) until death is what it means to be “ready” for a comfortable retirement. The calculations use average life expectancy.

ASFA said this “comfortable” standard would afford: “a broad range of leisure and recreational activities [and] a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel”.

A “modest” retirement could be attained with $23,996 a year for singles and $34,560 for couples. No further details were offered on what a ‘modest’ retirement meant, but one might guess it means choices would have to be made between holidays of any kind, a car and/or a low level of health insurance.

Overall, one in two households expect to be ready for retirement – but by far the strongest households in this sense are those run by couples. While only 27 per cent of singles are on track to be ready, 76 per cent of couples expect to be ready.

Breaking down singles’ retirement readiness by gender reveals some major concerns for women: because of lower incomes, time lost from their careers to raise children and longer life expectancies, only 22 per cent of single women are expected to be ready for retirement at 67, while the figure is 31 per cent for single men.

It’s a given that mindless spending habits including impulse spending – which happens when people are feeling anger, guilt, stress or boredom – are affecting people’s ability to save enough for retirement.

A mindful approach to all personal finance issues, especially over-spending and under-earning, is gaining momentum as a solution.

Impulse spending
Impulse spending
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Employees want mental health at work taken seriously

Australian employees want mental health at work taken seriously

Employees want mental health at work taken seriously.

Australian employers don’t understand their employees’ major life concerns, according to a study of 500 workers and 300 bosses released in November 2016.

Insurance company Metlife’s  Employee Benefit Trends Study found that Australian bosses dramatically underestimated the importance of staff concerns about mental health issues. Depression, anxiety, stress and work-life balance while overestimating fears about physical health.

Financial stress played a big part in employees’ worries. A huge 41 per cent of employees admitted being distracted at work because of financial worries, while 31 per cent admitted having taken time off work to deal with “a financial issue”.

“This highlights a need for employers to step in with professional support and education to help boost their staff’s financial literacy, giving them peace of mind about their future security,” the report concluded.

The top five financial worries for staff were: job security, and not having enough money to live comfortably in retirement (both 55 per cent).

Having more time with my family, and financial security for my family if I’m not able to work (both 53 per cent); being able to cover medical expenses from a major illness (52 per cent).

Employers were asked what they believed their employees’ major health fears were and 88 per cent thought medical problems would top the list, with emotional problems identified by 69 per cent of employers.

Only six per cent of business managers nominated depression and anxiety as an issue, while 11 per cent identified stress and nine per cent believed work-life balance was a big issue.

Employee’s actual health concerns were the other way around however: 84 per cent mentioned emotional wellbeing, and 70 per cent named medical issues.

Depression, anxiety and stress were much bigger issues for employees than managers realised: 38 per cent of staff mentioned work/life balance, nearly a third (32 per cent) said depression and anxiety were major concerns and 29 per cent nominated stress.

The study conclusions included the claim employers could “win hearts and minds by encouraging emotional and financial wellness”.

Employers could “enhance employees’ ability to take control of their financial wellness by offering professional support and education”.

Metlife’s research also found employees were prepared to split the cost of customised benefits programs, including: medical or health insurance, flexible work arrangements, income protection, employee awards and incentives, and health and wellness programs.

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Find your pulse, stop impulse buying

Retirement Orange

Find your pulse, stop impulse buying

Who hasn’t indulged in a little retail therapy from time to time, especially after a shocking day at work, or an argument with your partner?

It often seems like a good time to buy a pair of new shoes perhaps, go to a movie or buy an album, a bottle of wine, a therapeutic massage to de-stress or even sign up to a gym membership.

So it can feel a little impulsive to spend money we haven’t budgeted on, so what? On the surface it seems like we are taking care of ourselves: doing something to comfort ourselves to deal with the anger or frustration of having our feelings trampled, or not living up to our own or someone else’s expectations.

According to a poll of 1003 consumers by US website creditcards.com, five out of six American admit to impulse buying. One in five people had spent more than US$1000 on impulse, which rose to one in three for people earning over US$75,000.

Spending money impulsively can make you ‘feel better’ and ‘more alive’. It can certainly seem exciting, and it’s hardly as reckless as taking drugs or gambling, right?

But it can be a serious problem if this is something we begin to regularly, or with expensive items, as a way of coping. And let’s face it, jobs and relationships – and life in general – can be stressful for extended periods.

Fortunately there are plenty of strategies to manage your impulse buying urges –according to BetaBait.com (a website helping start-ups connect with early adopters) you are much less likely to buy on impulse if you plan your shopping trip or walk to the shops rather than drive.

It found that sales are a trigger for impulse spenders (a staggering 88 per cent of impulse buys are items “on sale” – even if you didn’t need that item). It also said impulse spending often happens when you feel “angry, stressed, guilty or bored”.

Let’s consider that last point: when you feel “angry, stressed, guilty of bored”. Anyone would admit the issues making us angry, stressed, guilty and bored – or sad, or ashamed, or lonely – are not solved by a bottle (or a case) of wine, or upgrading computer or bike or car, or booking a holiday or seeing a movie.

Chances are we are just escaping feelings which will overwhelm us again in a few hours or days.

Working through complex and difficult problems is of course not easy. But we also forget what a hugely painful thing financial stress is. Ask yourself honestly, is your impulse buying adding to your financial stress?

Financial worries are now accepted as a leading cause of stress in people’s lives throughout the western world.

“Member financial wellness, engagement and measurable behaviour change is what we are aiming for. Members learn through awareness and education to build sustainable healthy habits.” says Financial Mindfulness Founder & CEO, Andrew Fleming.