Middle-income earners, investors report highest stress levels

Looking at wage brackets, those earning between $50,000 to $74,999 are feeling financially stressed the most at 26 per cent, followed by $25,000 to $49,999 at 24 per cent, $75,000 to $99,999 at 16 per cent, $100,000 to $149,000 at 12 per cent and $150,000 and above at 11 per cent.

Ilaine Anderson, AMP director of workplace super said January and February can experience high levels of financial stress.

“As the holiday season comes to an end, and credit card bills start to roll in, many Australians will be starting the new year under significant financial pressure,” Ms Anderson said.

“While many people think money worries are a personal issue, our research shows being financially stressed spills into your working life, increasing absenteeism and impacting productivity.

It’s a trend that Bernard Desmond, director and finance specialist at Loan Market, has noticed particularly that mum-and-dad investors are “feeling the heat”, which he has noticed has been rising since the last quarter of 2018.

“We’ve seen that a lot of investors, typically mum-and-dad investors, who’ve got more than one or two investment properties who we think have been over-leveraged and they’re starting to panic now, because property prices are sliding down or they’re not progressing in the same way that they have been used to seeing,” Mr Desmond said.

“We’ve seen that a lot of investors who are with traditional banks, like your majors and your second-tier lenders, they’re not meeting their lending requirements, or they’re not able to show enough sufficient servicing.”

How do I get my financial stress in check?

Investors looking to calm themselves down about their financials should be conducting an audit of their financial wellbeing, Mr Desmond recommended.

He said that they should be asking themselves:

• What is the net disposable income that you’re bringing in?;
• Which is through your primary sources, your wages or your business?; and and then
• What is the investment property bringing in?

And then buffering the results to those questions with asking themselves if they have surplus reserve to maintain, creating debt consolidation strategies or taking some equity out of their existing property.

“If your strategy is to hold onto these investment properties, you want to make sure that you’re not under financial stress, and you’ve got enough cash reserves,” he said.

“That could be through pulling out ... and building a pool of the reserve, or you’ve been making stock off your finances and looking at refinancing from negotiating from your current lenders, so that you don’t prolong the problem for too long.

“If you do that, you’ll get to a point that you’ve run out of options.” 

Ms Anderson added that they should set well-defined goals; research states that investors who do this have greater peace of mind.

“Goals help lift people above the day-to-day expense cycle, allowing a more ‘in-control’, longer-term view,” she said.

“People don’t wake up and think ‘I’m going to get a home loan’ – it starts with the desire, or a goal, to buy a house.

“Connecting finances with goals helps us engage with our finances, and then having a plan to achieve these goals can significantly ease stress.”