How financial control boosts wellbeing

ARTICLE

29 July 2022

4 mins read

See why being in control of your finances is one of the five fundamentals of a good life.

It’s no secret a lot of Australians are feeling financial stress right now, with the high cost of living and rising interest rates.

2022 research from the University of Sydney and Australia’s Mental Health Think Tank¹ found financial stress was a primary trigger of poor mental health in pandemic times.

The source of financial stress can be varied: unexpected expenses, low retirement savings, high credit card debt, a new student loan, a second mortgage, another child on the way. What’s less apparent, however, is just how extensively these financial pressures can affect us.

Matthew McGilvray, financial planner with AIA Financial Wellbeing, has helped many Australians reclaim financial control. He’s seen the insidious side of financial instability and says it has the potential to harm both your physical and mental wellbeing.

It also has the potential to adversely affect our relationships.

Financial wellbeing essential to overall wellbeing

A global Gallup study² of people in more than 150 countries identified five fundamental elements as essential to overall wellbeing:

Career wellbeing: Liking how you occupy your time at work
Social wellbeing: Having great relationships and love in your life
Physical wellbeing: Having good health and enough energy to be productive
Community wellbeing: Engaging with the area you live in
Financial wellbeing: Effectively managing your finances

The research showed that, while two thirds of respondents were doing well in at least one of those areas, only seven per cent were flourishing in all five.

That’s especially problematic given that all these elements are interrelated.

If you’re struggling with financial instability, for example, it might mean your relationships (social wellbeing) also suffer because you’re arguing about money matters. Or your career might suffer because you’re too preoccupied with financial stress to deliver your best at work every day.

Importantly, not everyone understands how far-reaching these effects can be. “That’s the point of difference we have at AIA,” Matthew says. “We’re really focused on wellbeing overall … and the important role that financial wellbeing plays, as a component of that.”

“Even though we’re going to focus on financial wellbeing mainly, we’re also going to speak to the other things that impact your wellbeing — like your mental, physical, community and social worlds,” says Matthew.

Key steps to take control of your finances

If you’ve reached a stage in your life where you want to take more care of your financial health, there is good news. There are small actions you can take right now that can have a big impact.

Matthew offers three tips for thinking about better financial wellbeing – which you can apply across all areas of wellbeing:

List your concerns: Take stock of all current areas of concern in your life. This might mean listing your assets and liabilities, relationship issues, and any concerns you have about your physical health. “It’s just having that big snapshot of your current situation,” Matthew says. “You can’t really move forward unless you know where you’re at.”
Set goals: Once you’ve identified your concerns, set goals in those areas so you can start to work towards them.
Make a plan: Finally, map out a plan to achieve those goals. This might include identifying the best help to enlist to ensure you achieve your goals.

Enlisting professional support to achieve financial wellbeing

Matthew provides financial information and advice to all kinds of Australians. Many of his customers are parents of young families who have bought their first home or upsized to a second. He also sees younger clients who are taking early steps to grow their wealth. Other clients, he adds, might be keen to save for retirement now that their children are due to leave home soon.

People who seek financial advice, Matthew says, can develop a detailed understanding of the best financial solutions for their particular needs.

“If it’s your health, you’re going to go and see a doctor. For a plan to achieve your financial objectives, see a financial planner.”

What to expect from a financial planner

An initial appointment with AIA Financial Wellbeing is no-cost and no-obligation. Before you attend, you provide some information about your life situation and goals. This feeds into a detailed picture of your overall financial situation.

It’s an opportunity to consider what your priorities are. Do you want to get in control of your budget? Do you need to start saving?

This informs how you might start to make plans to achieve overall wellbeing. “What we’ll try to do in that first meeting is have a really good conversation with the customer to understand where they’re at presently, and to flesh out those goals and objectives,” says Matthew.

Research from ASIC³ found that Australians want financial advice on many topics, including investments, retirement income planning, budgeting/cashflow management, and debt management.

ASIC also identified that Australians perceive there are a range of barriers to obtaining financial advice. Some expect financial advice to be too expensive, others believe their income and assets are too limited to justify financial advice, and some think they need more know-how to engage with the industry.

Matthew, however, finds many of his customers perceive barriers to financial planning that don’t actually exist.

“A lot of customers might have had that mindset before they come and see us, [never realising] how much help we can actually provide.”

Talking to a financial planner can help you understand your situation and make confident financial decisions (big or small) so you can get the most out of life.

Footnotes

^{1 In their own words: An Australian community sample’s priority concerns regarding mental health in the context of COVID -19 - https://doi.org/10.1371/journal.pone.0268824

2 https://www.gallup.com/workplace/237020/five-essential-elements.aspx

3 https://download.asic.gov.au/media/5243978/rep627-published-26-august-2019.pdf}

Disclaimer:
Copyright © 2022 AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situations, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.