Worry Less About Money in 2019

Want to start the New Year in a less stressed state of mind? Money is right up there with health and jobs as a key source of stress for many Australians.

What’s keeping you up at night?

If you’re like most Aussies, having money on your mind stops you getting a good night’s sleep. According to UBank’s latest Know Your Numbers survey, more than half of Australians (59%) are kept awake at night by money worries. Their survey also shows these concerns are largely due to the fact that 86% of Aussies are literally in the dark about where they stand financially.

So it seems a few sleepless nights could be avoided simply by paying closer attention to what we’re spending from month-to-month. But another piece of research into impact of financial stress shows the problem goes much deeper. With their 2017 survey of more than 1000 Australians, Financial Mindfulness commissioned Core Data to explore just how much money stress can affect quality of life. They reported almost one in three people suffer from significant financial stress. Not only is this causing lost sleep, it’s putting them at greater risk of poor health outcomes, angry outbursts, arguing with their partner over money and even turning to drugs or alcohol.

Is more money the answer?

As well as showing just how tough life gets when you’re anxious about money, the survey demonstrates that a higher income is no protection against financial stress. According to the survey, people on an income up to $150,000 and with investments up to $750,000 were only slightly less stressed about money than those earning up to $90,000 and with less than $350,000 invested.

If you don’t have enough to cover food, education, clothing and medical expenses and put a roof over your head, more income is definitely going to take away a major source of stress just by allowing you to provide for basic needs. But beyond that, more income doesn’t deliver greater happiness. Numerous studies show earning more than $100,000 a year just opens the door to buying more expensive things – a Porsche instead of a Nissan for example.

Understand what you truly value

Having worked with many people to solve financial headaches they have in spite of a high income, I have seen what drives them to keep spending to the absolute limit of their finances and experience stress as a result. I’ve seen clients who rely on borrowing to keep pursuing whatever it is that can to boost their status. It might be a $20,000 bike they can ride alongside others in their social circle or buying the bigger house in the better neighbourhood. Most of these purchases aren’t driven by genuine personal values or priorities. It’s about keeping up with the Joneses.

This is why it is important to make value one of the first items on your agenda. It’s no good talking through numbers until you’ve established why you spend this way in the first place.

Take action

I’ve always found a values conversation essential for clients to succeed in following through with an action plan. It can be a struggle to get anyone to stick to a cash flow, budget or savings plan, if it does not align with their true values. A values conversation has the greatest impact on their motivation to make changes. Then you can follow up with a specific process to determine what needs to change.

It starts with a look at cash flow – money in and money out – to get to a realistic budget for expenses, that doesn’t go overboard on luxury spends. Then have a look at debts, good and bad, to develop a plan to reduce those, with the highest interest coming first. The final piece is linking progress with these plans to agreed values and goals, which will give you a compelling reason to follow through.

Choose your influencers

The people you spend time with play a very important role in fuelling or limiting financial stress. A phrase I’ve found to be true is that we’re the by-product of the five people we surround ourselves with most of the time. They’re just as critical to your success in shedding money stress as the steps you’re following to get a grip on your finances. Being with people who value and buy ‘things’ means feeling the pressure to do the same. When you’re really committed to living a different way, re-evaluate your circle. It might seem harsh, but it’s important to understand that they’re going to influence how you handle money.

If you’re serious about reducing your stress around money, look to build an external council you can lean on as you go about these financial and lifestyle changes. Engage with friends who’ll keep you honest about controlling spending. Work with professionals like a financial planner or hands-on accountant who brings new ideas as well as support towards your goal of reducing your financial burden and the stress that goes with it.

We are readily available for a chat if you would like to discuss your new plan for 2019 and where to go from here, so please get in touch!

Alastair Hodge - Financial Adviser @ Elevate Wealth Solutions