Severe financial stress is costing Australia $66 billion a year

Too many Aussies are falling into this black hole and it’s costing us $66 billion a year. But there’s an easy solution.

In Australia and around the world, our levels of financial wellbeing are low.

According to research from AMP, almost one million Australians report they’re facing ‘severe’ financial stress. The cost of financial stress has been estimated at $66 billion annually, which has more than doubled since 2020.

The two areas impacted most by financial stress are lost workplace productivity and lost time. The statistics show us that over 21 per cent of Australians reported lost productivity due to financial stress, and the average worker loses over 10 hours every single week dealing with financial issues and stress.

There are significant challenges when it comes to financial wellbeing, but on the flip side there’s also significant opportunity.

Apart from just avoiding the stress and lost time that will allow you to focus better on your work and career, nailing your financial wellbeing is going to help you do better with your money. Getting this right will allow you to move forward confidently towards the goals that are really important to you.

There are three main elements you need to get right if you want to reduce financial stress and improve your money wellbeing.

Clear plan

If you don’t know where you’re headed with your money, it’s hard to build confidence. It’s also impossible to know if you’re doing enough, too much, or if you should be doing more. This is the area that has the biggest impact on your levels of money stress.

It still blows me away how few people know the financial trajectory they’re on, or where they’re likely to end up financially if they keep doing exactly what they’re doing today.

When you take the time to map this out and understand how and where you’re heading with your money, there’s an immediate shift. You get instant feedback on whether what you’re doing is enough to get to where you want to be, allowing you to course-correct if it’s needed.

Sit down and work out if your current financial plan aligns with your future goals. Picture: iStock

If you do need to change what you’re doing to get to where you want to be with your money, at least you know so you can figure out how you’ll make it happen. Because of the compounding effect of time and money, the sooner you start making changes, the smaller the changes you need to make to get things on track. If you wait a week, a month or a year, you’ll just need to do more to get to the same outcome.

Having a clear plan and seeing that what you want is possible will also give you motivation. You’ll realise that what you want to achieve is realistic and achievable, and this will give you the motivation to put in the work to get there.

Know your unknowns

One of the biggest detractors of financial wellbeing is doubt. Because there are so many different aspects and elements to money, and because it can be so complicated and confusing, it’s common to have that niggling thought in the back of your mind that there’s something you’re missing that’s going to lead to trouble.

Because there are so many unknowns, it’s close to impossible to have full confidence without having an external set of eyes looking at what you’re doing.

In the early stages, when you’re just getting started saving and investing, this is needed less, because your path is generally pretty clear. But as you start building some solid money momentum, along with accelerating money progress, increasing doubt and uncertainty is common. The most effective solution here is having your money approach sense-checked by a professional.

There are many unknowns when it comes to saving and investing, so sometimes it pays to get help. Picture: Unsplash/Joshua Mayo

A good professional will be able to quickly see if there’s something you’re missing out on, something that might be slowing you down or holding you back, or something unknown bubbling away below the surface that could lead to trouble later on.

And on the flip side, a good professional will be able to identify areas you can optimise and improve to get better results out of what you have in place today.

Once you know your unknowns are covered, you’ll have peace of mind to go ‘all in’ on what you’re doing with your money. You’ll follow through to get the results you want faster. And, you’ll do it with more confidence.

Manage your risks

Ultimately, risk is a good thing, because it’s what will make you money when you invest – but if your risks aren’t well-managed they can cause you trouble.

Some risks are obvious, like needing to have a stash of cash savings as an emergency fund buffer. But others are less clear, like the lifestyle risk that can come with purchasing a property.

If you aren’t aware of (or ignore) money risks they can cost you money, causing setbacks that derail your money progress.

Risk often can’t be eliminated altogether, but it can be managed and reduced. And knowing your key risks are managed is something that goes a long way to driving true money wellbeing.

As you’re planning and executing your money moves, take the time to understand the risks you’re facing and how to manage them well.

The wrap

In Australia there is a large financial wellbeing gap that’s impacting millions of people and collectively costing us a huge amount of money every single year. Our financial wellbeing is in decline, and the costs and impact are accelerating.

But it doesn’t have to be this way.

Your financial wellbeing is largely within your control, and there are some key things you can do to improve your money wellbeing today. When you take the time to make this happen, you’ll see an immediate shift in how you think and feel about your money, and have more confidence to take the steps you need to take to get the results you want.

Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth, the host of the How to be Successful with Money podcast, and author of the Amazon best-selling book ‘Get Unstuck’

Ben runs regular free online money education events to help you make better money choices and get ahead faster. You can check out all the details and book your place here

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.