Navigating the new normal: managing financial stress in australia

In the wake of recent economic shifts, many Australians are grappling with unprecedented levels of financial stress. The AMP Financial Wellness Report 2024 paints a sobering picture of the current landscape, revealing that a staggering 6 million Aussies are experiencing severe to moderate financial stress. This article explores the causes of this widespread issue and offers some practical strategies for managing financial pressure in these challenging times.

The current financial climate

The aftermath of interest rate hikes has left many Australians struggling to adjust to a "new normal." Key findings from the AMP report include:

• One in four Australians are harbouring financial stress

• 31% fear their home loan repayments may become unsustainable if interest rates continue to rise

• 37% of renters report feeling stressed, with 38% citing rent costs as the primary stressor

• Over 150,000 Australians feel unable to actively participate in the economy due to their financial situation.

Short-term strategies for managing financial stress

When financial pressures feel overwhelming, it's important to have immediate coping strategies. These short-term tactics can help you manage stress while you work on longer-term financial solutions:

1. Reframe negative thinking:

   Avoid self-criticism and focus on learning from setbacks rather than dwelling on them.

   
   

2. Prioritise enjoyable activities:

   Make time for low-cost or free activities that bring joy and help maintain perspective.

   
   

3. Reach out for support:

   Share your concerns with trusted friends or family members. Social support is crucial for coping with stress.

   
   

4. Implement a "worry time":

   Designate a specific time each day to address financial concerns, helping to reduce ongoing anxiety.

Long-term financial wellness strategies

While short-term tactics can provide immediate relief, developing long-term strategies is crucial for sustained financial health. These practices can help you build resilience and create a more stable financial future:

1. Practice self-care:

   Prioritise your physical and mental health through regular exercise, healthy eating, and adequate sleep.

   
   

2. Build savings habits:

   Even small, regular contributions to savings can improve financial stability over time.

   
   

3. Examine your relationship with money:

   Be mindful of emotional spending triggers and work to develop healthier coping mechanisms.

   
   

4. Delay impulse purchases:

   Implement a personal "waiting period" before making non-essential purchases to reduce impulsive spending.

   
   

5. Set spending limits:

   Allocate a specific amount for discretionary spending each month to maintain control over your finances.

The role of brokers and financial advisors

As financial pressures mount, many Australians are turning to mortgage brokers for guidance. While brokers can offer credit advice, they cannot provide comprehensive financial planning. Nevertheless, their expertise is in high demand: 

• 33% of customers seek broker advice to save on their mortgage

• 30% need help with general savings strategies

• 28% require assistance managing expenses

• 25% are looking for retirement planning advice

• 24% need guidance on superannuation management.

Conclusion: seeking professional help

If financial stress becomes overwhelming, don't hesitate to seek professional assistance. Financial counsellors can provide personalised advice and support to help you navigate challenging financial situations.

Remember, financial stress is a common experience, especially in times of economic uncertainty. By implementing these strategies and reaching out for support when needed, you can work towards greater financial wellness and peace of mind.