R U OK? Day: How to look after your financial health

With many Australians now out of work, financial stress is no doubt on the rise. Over 40% reported feeling nervous, restless or exhausted in the past month, according to the Australian Bureau of Statistics. 

Your financial health can have a huge impact on your mental health. That’s why this R U OK? Day, it’s important to stay connected and check up on your own finances as well. 

Chair of the ‘R U OK?’ Conversation Think Tank, Kamal Sarma, says now more than ever, “we need to spatially distance but socially connect.”  

“People are affected a lot about their finances, mentally. It can create a lot of worry and concern. For example, if you’re near retirement and you see your nest egg dropping in value or you’ve lost your job, that can be really challenging,” Sarma says.

If you’re feeling trapped from piling bills or debts, remember it’s never too early or too late to take back control of your money. Small steps in the right direction today can make a big difference in the long run. 

Read on for tips to help you regain your financial and mental footing.

1. Talk to a professional

If you’re going through a financial struggle, you don’t have to face it alone. A financial counsellor can assist you with figuring out your next steps. 

“Financial counsellors are trained to help people who are feeling anxious about their finances and future. They can guide you through your options and rights,” says Financial Counselling Australia’s chief executive, Fiona Guthrie. 

Accessing this professional advice shouldn’t cost you anything, as Australia has many free financial counselling services - over 850 across the country, according to the National Debt Helpline (NDH). 

To find a service in your local area, check out the NDH’s handy Find a Financial Counsellor map.

Alternatively, mental health helplines like Beyond Blue (1300 22 4636) and Lifeline (13 11 14) are also free to call and available 24/7. The government’s HealthDirect website has more information on other helplines you can contact, depending on your needs.

2. Let your loved ones know

With money problems also tending to affect the whole family, your loved ones’ support could be just as crucial in helping you get back on track. Although you may initially feel awkward or uncomfortable sharing your worries, opening up to a partner, parent or sibling that you trust can actually make you feel a whole lot better.

“When you feel like you’re going through it by yourself, it’s much harder,” says Sarma. 

But having the conversation around money troubles could remind you that many others are also struggling and you aren’t alone, he adds.

Plus, you loved ones can alleviate some of your everyday stress, for instance, by looking over your budget with you or suggesting more affordable ways to continue spending quality time together.

3. Crunch the numbers

Feeling the blow to your bank account every time you go grocery shopping or pay down a debt? While tracking your expenses can be a confronting exercise, there’s a lot to gain from keeping a tab on your spending. 

Expense tracking lets you take a step back and see your finances in a clearer light. And it doesn’t have to be time-consuming either; in fact, there are plenty of free budgeting apps out there that do the hard work for you, so you won’t need to go through pages and pages of your bank or credit statements. 

Many of these apps also contain nifty features like transaction categorisation, and the ability to link with your bank accounts, credit cards and loans. That way, you can keep all your finances organised and in one place.

Once you have the numbers in hand, it’s time to make sense of them:

• Are there any expenses you could cut down on? This could cover small changes like ordering less takeaway or cancelling your Netflix subscription. Or it could involve bigger changes like finding a cheaper energy deal or switching to a more suitable car insurance policy, so you aren’t paying more than what you have to.
• Are there any spending habits you can identify? Are you online shopping to deal with stress? Or drinking more frequently to ‘wind down’ at home? Expense tracking is also a good way to identify your comfort spending patterns. Being aware of those habits is the first step to replacing them with healthier coping methods (like baking therapy or going for jogs).

Add up your total income, too. If you’ve recently lost your job, this may include:

• Any JobKeeper or other government stimulus payments
• A tax return you’re expecting soon
• Unwanted items at home that could be sold online. A 2019 Gumtree report found the average Aussie household is sitting on over $5,000 worth of those goods
• Interest you’ve made by stashing money inside a savings account or term deposit

4. Make a plan to bounce back

With the pandemic leaving many families more out of pocket than usual, you may find that your old budget no longer works. The golden rule when devising your new plan is to make sure your income can cover all your costs.

In other words: more money is going into, rather than out of, your bank account monthly. Or at the very least, you break even. 

If that isn’t the case for you right now, there are three solutions: reduce your expenses, find potential income streams, or do a bit of both. Our guide on creating a crisis budget has five steps you can follow. 

Sarma says this is the time to prioritise your needs over wants. 

“Whenever we go through crises, we actually start to understand what’s really important in our lives,” he says.

“Do I really need a holiday? Not really. Do I really need a new car? Not really. I want those things.”

“It’s making sure you lower your requirements at this time,” he adds. 

“[For instance] if you’ve lost your job or your partner’s lost their job, [you may need to] reduce your expenditure as quickly as possible to make sure you have some leeway and some capacity to ride out the storm.”

The sweet spot for your crisis budget is that it’s strict, but realistic. While most of your income should be dedicated to paying essential expenses (e.g. rent, utility bills, groceries, phone and internet) or to saving up, it’s okay to leave a little space for the ‘fun’ stuff. That will make sticking to your new budget much easier.

5. Manage debt anxiety

If your mortgage or credit card balance has been stressing you out, there are ways to break down those debt repayments into more manageable chunks. Maybe it’s a matter of rethinking your repayment strategy, or asking your bank for assistance.

• Seek external help: Many banks have financial hardship policies to aid customers in times of need. There is where you can access support, such as waived fees and smaller or deferred repayments. To discuss your options, simply contact your local branch, or if you feel uncomfortable talking over the phone, some banks should also have live chat services.
• Prioritise your IOUs: If you have questions racing through your head like ‘Which debt should I pay off first?’, then prioritisation could give you the focus you need. Depending on your situation and money habits, either start with the highest rate debt (usually credit cards) so you can get the biggest hurdles out of the way; or start with the smallest debt for a greater sense of accomplishment early on. Just remember to also make minimum repayments for all your other debts, so you aren’t being slugged with late fees and interest charges.
• Consider a balance transfer: Making the switch to a more suitable banking product could also provide some relief. For instance, if you have credit card debt, then a balance transfer option may be the better fit. These cards come with a 0% interest rate for a fixed period, so it gives you breathing space to pay off your existing balance.

6. Take breaks in between

Last but not least, be kind to yourself. The process of whipping your finances back into shape can be strenuous, so don’t forget to take breaks and stay connected. Here are some affordable ways to unwind and recharge:

• Pick up a free hobby: Your pastimes don’t have to cost you hundreds of dollars a year. Whether it’s hiking in your local national park, learning a foreign language online, or trying your hand at origami, you’ll find plenty of choices that will cost you almost nothing at all.
• Meditate: It takes just 10 minutes out of your day, but meditation is an effective way to clear your mind and reduce your anxieties. Meditation apps like Smiling Mind, Headspace and Calm are all free to download.
• Get moving for under $5: If you’ve had to forego your gym membership, fitness apps and YouTube workouts can help you stay under budget while also staying fit and healthy.
• Spend time with friends/family: Anyone fancy a board game night or a homemade meal together? Surrounding yourself with supportive people during tough times is essential. If you live alone, you could make a habit out of weekly virtual catch-ups or organise a COVID-safe meetup at the park.
• Focus on the bright side: While you can’t ignore the reality of your financial situation, there’s no reason not to acknowledge all the good things that you do have in life, like your loved ones or your pet.

Looking for more resources and assistance options? Our guide to coronavirus and your finances may be able to answer your other big questions.