Bills, bills, bills: how are you dealing with housing stress?

Turns out we’re spending more and more of our pay packet on our accommodation. How’s the average Australian dealing with this shift?

Money issues are regularly rated as the number one cause of stress in Australia. Regardless of whether or not you’re in debt, being able to afford a roof over your head on top of daily expenses is likely to play on your mind.

It’s also become a fact of life that accommodation – rented or bought – doesn’t come cheap, and most of us are having to adjust our budgets accordingly.

The recently published Census data revealed that 10 per cent of renters in Australia are spending more than 30 per cent of their total household income on rent. Meanwhile, seven per cent of people who own their own home are spending that same 30 per cent on mortgage payments. The strain this financial outlay places on our personal finances is something the Australian Institute of Health and Welfare classes as rental stress.

We spoke to an Australian budget expert, an Aussie renter and a UK homeowner to work out the best methods of minimising the mental stresses that come with managing a tight budget.

If you find managing your personal finances no easy feat, take solace in the fact that you’re not alone. Tammy Barton, founder of MyBudget, has been helping people with their personal finances for nearly 20 years.

“It’s very common for people to feel like they should have handled their money better, or that they shouldn’t need to ask for help,” explains Tammy.

“The thing is though, nearly everybody experiences money troubles at some point in their lives and very few people have the right skillset to solve financial problems on their own.”

If allowed to snowball, financial stress can have a detrimental effect on your quality of life – not just in terms of what you can physically afford to do, but also in the way it can negatively impact your mental health. Depression, anxiety and insomnia can all be induced by stress of this kind, so if you ever feel overwhelmed by the prospect of managing your finances it’s important to reach out – to a friend or a professional – and ask for advice. Once you do, it’s surprising how many people will want to talk about it, and divulge their own tried and tested methods of managing their expenses.

There isn’t one correct way to manage money. There is, of course, lots of good advice on the subject, but ultimately your expenses will depend on your individual setup.

“The best thing you can do to relieve financial stress is to come up with a plan,” says Tammy. “A budget will show you what sort of arrangements are affordable and whether you’re dealing with a long-term cash flow problem or short-term crisis.

“Set aside time to create a detailed and long-range budget that includes all of your expenses over a 12-month period. Make sure that you include everything—not just your weekly and monthly expenses, but also your quarterly and half-yearly bills, such as car registration.”

Once this kind of budget plan is in place, it’s time to get micro. For 30-year-old Sydney-based renter Louise, who spends around 40 per cent of her income on her accomodation, compartmentalising is key.

“I have separate accounts for bills, rent, savings and spending money and have my money automatically transfer to those accounts every payday so that I don't have to worry about it,” she explains. “That way, I know all bills and rent are being covered, my savings are in another place that I can't access as easily, and whatever money is left over in my spending account is mine to spend. That’s the only way that stops me from feeling overwhelmed by my finances.”

29-year-old Steph, based in Manchester, recently made the decision to buy her own property. She puts approximately a third of her income towards a reduced-term mortgage.

“In hindsight, I think taking on a reduced term is actually quite stressful,” she says. “When I consider that my mortgage is about 25 per cent of my salary, but then I have to pay bills, council tax and a service charge all by myself, it all actually exceeds a third of my salary in total. Ultimately I can afford this, but only on the basis that I'm careful with the pot that’s left.

“I spend hardly anything on clothes these days and eat out way less. But I do this knowing that I won't have to keep paying this mortgage off until I'm 60, which is the future most people my age have signed up to.”

Making sure you have enough money to survive the month plus pay all your bills on time is much, much easier when you’re able to stay on top of things. The easiest way to do that is to have a clear idea of what your expenses are. Chatting with budgeting experts can help, or you can download a free app like Pocketbook, which maps out your spending and provides you with a month-by-month financial overview, giving you a good indication of where you can cut back or afford to spend more.

There are plenty of tools out there that can provide us with a framework for handling a tight budget. When it comes down to it, a sense of shame and reluctance to get help can often be the biggest barrier to efficient management.

“For anyone who might be feeling embarrassed about their financial situation,” says Tammy, “I want them to know two things. Firstly, you don’t have to do it on your own – find someone you trust who can help you. And, secondly, I’ve never come across a money problem that can’t be fixed.”

This article provides general guidance only. Specific financial advice should be sought out in-consultation with a financial expert.

Staff writers come from a range of backgrounds including health, wellbeing, music, tech, culture and the arts. They spend their time researching the latest data and trends in the health market to deliver up-to-date information, helping everyday Australians live healthier lives. This is general information only and is not intended as medical, health, nutritional or other advice. You should obtain professional advice from a medical or health practitioner in relation to your own personal circumstances. The information in this article is general information only and is not intended as medical, health, nutritional or other advice. You should obtain professional advice from a medical or health practitioner in relation to your own personal circumstances.

Disclaimer:
The information in this article is general information only and is not intended as financial, medical, health, nutritional, tax or other advice. It does not take into account any individual’s personal situation or needs. You should consider obtaining professional advice from a financial adviser and/or tax specialist, or medical or health practitioner, in relation to your own circumstances and before acting on this information.