Are your finances affecting your wellbeing?

4 min read

When it comes to our wellbeing, most people know that it’s important to eat right, exercise and maintain a healthy work-life balance. But have you ever stopped to consider how your finances could be affecting your quality of life?

Research by BT shows that 1 in 3 Australians report their quality of life has been affected due to their financial situation. The BT Australian Financial Health Index (the Index), which provides insights into the financial wellbeing of Australians, explores how over 4,000 people manage their finances including saving and spending, retirement and super, insurance and investments.1

Impacts on home and work life

The Index showed that the effects of Australians’ financial situation extend to mental health, family relationships, physical health and productivity at work.

Source: 2016 BT Australian Financial Health Index

The personal impacts experienced occurred fairly evenly across metro and regional areas, genders and household income ranges.2

Why are Australians concerned about their financial situation?

According to the Index, Australians’ views of their financial wellbeing have worsened in recent years, with concerns growing across many sectors of the community. Compared to five years ago, Australians are increasingly concerned about income stagnation, debt repayments and retirement adequacy.3

Having goals and better financial knowledge can help

Despite these negative sentiments, there were also positive findings around how goal setting and better financial knowledge can help Australians’ perceived financial wellbeing.

The Index showed that in general, Australians who actively engage with their finances by setting goals and making plans have higher financial wellbeing. 74% of Australians who ‘always’ make plans on how to reach their financial goals report their financial situation as being positive compared to 26% of those ‘never’ make such plans. This suggests that actively engaging with finances may be a useful way for people who have financial concerns to improve their financial wellbeing.

The Index also showed that the more knowledge that Australians perceive they have about superannuation, the more likely they are to report positive financial wellbeing, even if they have concerns about retirement adequacy. 77% of Australians who ‘strongly agree’ that they feel knowledgeable about superannuation assess their financial position as being positive compared to 27% of those who ‘strongly disagree’ that they feel knowledgeable.

We see a similar pattern amongst those Australians who have concerns about retirement adequacy, with 68% who ‘strongly agree’ they feel knowledgeable about superannuation reporting positive financial wellbeing compared to 16% of those who ‘strongly disagree’ that they feel knowledgeable. This suggests that people who are concerned about retirement adequacy can improve their financial wellbeing by building their knowledge of superannuation.

5 things you can do to help your financial wellbeing

1. Be clear on your financial goals

Consider your financial goals and the amount of money that you’ll need to make them happen. Knowing your financial goals and keeping them in mind could also help you make wiser day-to-day financial decisions.

2. Control your debt

Start by calculating all the money you owe to give you the full picture. Consider the types of debts you have and prioritise those with the highest interest rates. You could also consider looking around for lower interest rates, consolidating loans or trying to make payments above the minimum amount. See more detailed tips on how to manage your debt.

3. Create a budget and savings plan

Creating a budget can show if you are spending more or less than you can afford. Start by working out your income and expenses - there are plenty of online calculators that can help with this. By scrutinising your expenses you might be able to see if you can make any adjustments to help you save or pay down debt. Even if you can only save a small amount, accumulating savings for unexpected expenses can create peace of mind.

4. Get more informed about superannuation

Understanding superannuation including how to grow your super, how your super is invested and how much super you might need can sometimes seem complicated, but fortunately online resources like the MoneySmart website can help you build your superannuation knowledge. Exploring how to plan for retirement using tools like our retirement income calculator could help alleviate retirement adequacy concerns.

5.     Consider seeking financial advice

Financial advisers can help you identify your financial and lifestyle goals, design a plan, help you stick to the plan, and make changes to the plan if your circumstances or goals change.

Need help exploring your options to help you reach your goals and improve your financial wellbeing? Contact us or speak to your financial adviser.

1. The BT Australian Financial Health Index covers Australians’ attitudes and behaviour across a broad spectrum of financial needs. The Index provides insights from a comprehensive analysis of the financial wellbeing of Australians – their financial situation, managing finances, saving and spending, retirement and super, insurance and investments. The Index is compiled from surveying over 4,000 (18+) Australians. The data is weighted to ensure representation of the Australian population in accordance with census data provided by the Australian Bureau of Statistics. The 2016 BT Australian Financial Health Index canvassed the responses from 4486 Australians in November 2016.
2. The Index showed that of people who experienced at least one impact on their quality of life in the past 12 months, 36% lived in metro areas and 34% lived in regional areas; 43% were male and 47% were female; and 37% had household income less than $50,000, 34% had household income $50,000 - $100,000, 37% had household income $100,000 - $150,000 and 32% had household income over $150,000.
3. The Index showed that from 2012 to 2016, concerns about stagnant or declining income rose 4%, concerns about debt repayment rose 5% and concerns about retirement adequacy rose 11%.

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This information is current as at 4 August 2017. 

This information has been prepared without taking account of your personal objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

This article may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material. 

The tax position described is a general statement and is for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice.  

Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or visit the ATO website. 

© BT Financial Group 2017.