Among the over 50% of Australians experiencing financial stress, nearly 85% say it’s causing a negative impact on their wellbeing, according to the Financial Fitness whitepaper released recently by Mortgage Choice and CoreData.
Purposed to explore Australian’s attitude and behaviour towards finances, the whitepaper also revealed that the negative impact financial stress brings upon wellbeing varies in degree and more than two in five Australians admit they’re embarrassed by their debt.
“A number of factors may be contributing to people’s level of financial stress resulting from the shame associated with debt, poor planning and a general lack of understanding of their financial situation,” Mortgage Choice executive officer Susan Mitchell said in a statement.
According to the whitepaper, of those who said financial stress was negatively affecting their overall wellbeing, 90% were females and only 77% were males. And there are as many as 85% respondents in Queensland, 84% in New South Wales and 81% in Victoria who felt the negative impact of financial stress on their wellbeing.
Lack of strategy and goal
The whitepaper also discovered that one of the possible contributing factors of financial stress is the lack of a clearly defined financial strategy. Over 26% of survey respondents don’t set financial goals; of those who do, only 20% document them.
“It’s no secret that a sound financial plan with defined objectives give people looking to get financially fit a clear purpose and subsequently, peace of mind,” Mitchell said.
“I would urge anyone who is looking to gain control of their finances to first reduce their level of personal debt, namely any high-interest non-tax-deductible debt such as personal loan and credit card debt.”
With over 18% of respondents not saving a portion of their salary, Mitchell advises that setting an emergency or rainy-day fund will not only teach the benefits of saving but will also give financial security in the short-term when personal tragedy or loss strike, such as divorce or death.
Five steps to financial fitness
Mitchell admits that getting financially fit isn’t a simple task and, as the research reveals, a lot of people feel overwhelmed by it. For that reason, she stressed why it’s important to seek the services of a qualified financial adviser.
“A qualified adviser can help you create a strategic financial plan for what you need, whether that be getting out of debt, saving for your first home deposit, or new car, investing, starting a family, protecting your most valuable assets such as your income and your home or, preparing for retirement,” Mitchell said.
“An adviser can help give you the peace of mind that you are on track to achieve the goals that are important to you.”
Mortgage Choice financial planning advisers lay out top tips to be financially fit:
- Record short-term and long-term financial goals in a notebook
- Print bank and credit card statements and identify which expenses can be reduced or cut out so it can be saved or invested in reaching the goal
- Create a defined budget and abide by it
- Save some salary in a separate savings account each pay cycle
- Regularly track the progress of short- and long-term goals. It can be fortnight or every six months, and don’t forget to celebrate when goals are reached