Regardless of financial position or socio-economic status, we’ve all worried about finances at one point or another. And if you are under financial pressure at the moment, you’re not alone. A recent survey by financial comparison site Canstar, found that 95% of Australians are feeling financial stress right now.
As lockdowns continue across much of the Eastern Seaboard, financial stress is real for people of all walks of life. Here are our tips for managing it.
#1 Focus on what you can control
In an uncertain world, much of what is happening is out of our hands. If you are working or own a business in one of the impacted industries, or live in an “LGA of concern”, the challenges may feel even more overwhelming.
It can help to break down the issues into what you can control and what you can’t. Focusing on where you can have an impact can help you take action and avoid decision paralysis.
Remember, when it comes to your finances, inactivity is your enemy.
#2 Know where your money is going
Budgeting is often seen as a synonym for sacrifice, but it is really about knowing in great detail where your money is going, so you can make adjustments to manage priority areas. It’s important to be realistic too; you can’t forgo everything in life. For example, access to streaming services in lockdown may be more of a necessity than usual, but there are likely areas where you can cut back instead.
When we do this exercise with our clients, we find most people underestimate how much they are spending each week, often forgetting the small expenses that quickly add up. These expenses usually don’t have a notable impact on lifestyle, so it can be easier to cut them back.
Knowledge is power when it comes to your finances, so it pays to take a deeper look. You can download our free budget template here.
#3 Put a framework in place for your financial decisions
When we are under stress, we are much more likely to make rash decisions, and this can be disastrous when it comes to our finances. We may also find ourselves reflecting on the outcomes of past decisions to make our next ones.
While this sounds good in theory, it can be a minefield as we often don’t consider the context or outside influences that may have determined the outcome. It’s important to have a reliable framework that we can count on for our decision-making, rather than rewriting the process every time. We talked about this in a previous blog, which you can read here.
#4 Set some clear ‘mini’ goals
Often when we are trying to manage financial pressure, we set ourselves a goal of resolving the challenge, which sounds fine on the surface. However, we need to achieve a series of steps to get to a resolution point in most cases. And these mini steps should be the goals that we measure. Measuring in ‘metres not miles’ can make it easier to stay on track as you can see your progress.
#5 Understand your stress responses
When we feel overwhelmed, we all have emotional and physiological responses that are not helpful to clear thinking or decision-making. When these symptoms arise, trying to make a decision can be futile and often results in a further spiral. Whether it is taking a walk, listening to music, spending time with pets, or just getting outside, most of us have an activity that will help to clear our heads. The Black Dog Institute has some helpful resources to manage stress here.
#6 Get advice
Financial decisions can have long-term impacts on our lives. If you are making them without a clear plan, it can feel a little like deciding how you will get somewhere without a destination in mind. That’s one of the life-changing impacts of financial advice – it gives you a roadmap so you can make the right moves, whether you need support to reduce debt and get your finances on track or grow and manage your financial position.
If you are an Apt client, reach out to your Apt Adviser for support – we are here to guide you through financial decisions and challenges, so you don’t have to go it alone. If you aren’t an Apt client, get in touch with our team to find out how a financial plan could help alleviate financial pressures and keep you on track with your goals.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.