Morningstar Investor users sign in here.


How to deal with financial stress

More high-income earners are now also experiencing financial stress. We go through practical ways to reduce it

More Australians are experiencing financial stress and anxiety due to challenging market and economic conditions. The ABC has reported that 1.5 million Australians are at risk of mortgage stress. SBS reports that 3.7 million Australian households experienced food insecurity in the last 12 months.

High income earners are not immune. Canstar has calculated that a household earning $187,542 who purchased a Sydney house for $1,416,960 in April 2022 with a 20% deposit would be repaying a loan equivalent to six times their income. $187,542 represents the Canstar’s estimation of an average dual income household. A couple earning $187,542 collectively would find 66% of their post-tax income dedicated to mortgage repayments. *
Renters are also struggling. Rents have increased 13.2% for houses and 23.7% for units in between September 2022 - 2023.

Everything is costing more. We are all aware of the rising costs of housing, food and petrol, but inflation has also impacted us being able to participate in activities that bring meaning to life. As surplus cash decreases, cost of recreation and cultural activities has risen. This means that Aussies are getting out less.

We spoke to Betsy Westcott, Founder of the Inner Money Journey to understand practical ways to reduce financial stress and anxiety.

One of the main ways is to understand your relationship with money by identifying your ‘money persona’. Betsy expands on the types of money personas in the conversation and offers a few examples of different strategies to reduce financial stress for each money persona.

Money personas offer the opportunity to truly understand yourself, your goals and your behaviour. Self-awareness is helpful for establishing strong financial foundations and building wealth. It’s important to know what your goals are and the type of investor you are to find the right balance with risk in your portfolio and set you up for success with the right investment products that suit you. Start with a self-reflection exercise before jumping into specific investments.

A transcript of the conversation is included below.

Shani Jayamanne: Betsy, thank you so much for joining us. So, firstly, can we talk a little bit about the underlying drivers of why Australians are feeling this cost of living pressure and the effects of cost of living?

Betsy Westcott: Yeah. Well, we are living through some pretty extraordinary times. And I think generationally, millennials, Gen Z, they make up a really large portion of the working Australian cohort. And they've never seen this before as well. So, it's a lot of people navigating things like rising interest rates, inflation for the first time, and all are just kind of reeling a little bit from the shock of it. So, it's really hurting people's hip pockets. The cost of living and the cost of housing has increased so rapidly. It's been the shortest, sharpest interest rate rise that we've seen in, I think, three decades or so. And you can't make that money back in just a single year in terms of negotiating a pay rise, or at least most of us can't. So, if it's not something you've navigated before, suddenly having to manage a budget, renegotiate your bills, renegotiate your home loan rates, is quite confronting. And it's a new set of skills to build. So, yeah, it's confronting a lot of people and making times quite tough.

Jayamanne: Completely. So, can we talk a little bit more about financial pressure? It's just a buzz term, but what does it actually mean and how does it realistically pay out for people?

Westcott: Yeah. It's something that all of us experience from time to time. And the thing about financial pressure, it's not just worrying about, can I pay this bill or will I have money available if something unexpected happens. But it's something that flows out and is quite insidious and affects so much of your life. So, it affects your mental health. It affects your physical well-being. It affects your ability to concentrate and perform at work, probably at a time when you really need to be performing at work. And then it affects your relationship. So, you might wake up in the middle of the night, it's 3 am and you're like, oh my goodness, how am I going to pay for this bill? Or how are we going to pay for that holiday or send the kids on that excursion? That makes you tired. You skip the gym. Don't go and do the things that really help your well-being. You have an energy slump at 3 pm. You grab the sugary snacks, also not helping. You come home, you're tired, you're stressed, you snap at your wife or partner. The kids are irritating you and it just kind of puts a cloud over everything. And so, that's the impact of it. And then, at work, it really impacts productivity. The estimate from the AMP Financial Well-Being surveys, it's about $2.6 billion of lost productivity across the economy every year. So, whilst it's something that we want to address at an individual level, it's also something that companies should really be thinking about how can we support our employees' financial well-being. And I'm not suggesting just give everyone pay rises, because let's be realistic in this climate, probably not.

Jayamanne: Not going to happen.

Westcott: Yeah. But what other services or education or support and tools can we provide to help people navigate this challenging time with grace and feeling supported so that they can keep turning up to work and keep performing at work as well.

Jayamanne: And you spoke about the insidious nature of this and how it sort of creeps into every part of your life. So, what are some of the levers that people can pull to help with financial stress and their financial well-being?

Westcott: Yeah. Well, on a personal level, it's not putting your head in the sand. That's the worst thing you can do. And sometimes financial stress brings up so many feelings of shame and it's just me, and I feel overwhelmed by this. But the best thing you can do is be a person of action, your own action hero, so to speak, and understand what are the drivers of the stress, what are the options available and make a plan to get out of it.

So, first of all, I would be looking to see, do I have any high interest consumer debt or a debt hangover, some people like to call it, and understanding, okay, how can I make a plan to start getting on top of this? How can I find extra income to make more repayments and eliminate this debt? Because those high-interest debts, they do really take you backwards financially very quickly. If you have a mortgage, do a mortgage health check. Do not set and forget on your mortgage. So, have a look at what kind of mortgage you have and compare that to what other interest rates are available in the market. If there are institutions offering a better deal, the first protocol is to go back to your bank and see if they can match that. If not, it might be the time to chat to a broker or another bank around refinancing.

Then I would do a little audit of your bills. Some research from Finder came out recently that we as Australians waste $1,200 per year on unused subscriptions or bills that we haven't renegotiated. So, having a look where are you spending money, are you getting bang for your buck and utilizing that service subscription and looking for ways to save there. And the side of the ledger that I would really encourage people to look at and which really has unlimited potential to get us out of financial stress is our ability to generate income. Now that could be something that's quite quick win, like looking around your house at the items that you have, can you sell anything on marketplace, any unused goods? A nice rule of thumb is, if you haven't used it for 12 months, you probably don't…

Jayamanne: You probably don't need it.

Westcott: Exactly. And then there might be some more medium-term solutions like starting a side hustle or picking up some extra work or enhancing your skills so that you can negotiate a higher salary or find a higher-paying job. And then there's longer-term solutions like investing and creating passive income, but that's a more longer-term strategic play, of course. So, they're the areas I would be looking at to say, okay, what can I do to get myself out of this financial mess?

Jayamanne: And a large part of this is self-reflection. So, in a lot of your work, you do mention money personas. So, could you speak a little bit about what a money persona is and how it works and how it can help you to sort of understand who you are in terms of your relationship with money and how it can help you?

Westcott: Yes, I think a lot of us grow up understanding that money is about math and logic. But I think as you and I both know that couldn't be further from the truth, there's varying views of what are the money personas. The five that I talk about is the spender, the saver, the accumulator, the avoider and the monk. And really, this isn't saying who you are, but it does reflect some of your more typical behaviours when it comes to wealth and money and making financial decisions. And understanding that and having that self-awareness can help us take control of these behaviours and honour the ones that are supporting our financial well-being but reframe those that challenge us. And something like financial stress can really trigger our worst behaviours when it comes to money.

So, if you're a spender, for example, who gets a lot of pleasure and joy out of being able to spend money and buy things, something like restriction and cutting back on the budget is going to feel acutely painful for you. And sometimes it can cause you to actually go the opposite way and spend while you've still got the money before anyone can take it away from you. What that really speaks to is the importance of self-awareness and self-reflection when it comes to money, knowing what you do well, but then also knowing what are those shadows, what are those sabotaging behaviours that we all have at times and just making sure that you're catching them before they sabotage your financial well-being or further diminish your financial well-being.

Jayamanne: Completely. And so, are there any sort of resources that you can point people towards to help them if they're in financial stress?

Westcott: Yeah. So, there's some private resources and public resources. So, I myself along with David Koch and other financial expert here in the Australian media scene.

Jayamanne: Never heard of him.

Westcott: Never heard of him?

Jayamanne: No.

Westcott: Glasses, very friendly dad-like. So, he and I have collaborated on creating a course specifically to help people deal with financial stress. And we've positioned that to individuals who might be feeling the pressure themselves. It's a 10-module self-study course. But it's also catering towards organizations, because like I said, it's something that really impacts productivity, which impacts profit for organizations. So, investing in providing tools and resources to support employees' financial well-being is a really good investment. So, that's available. Beyond that, places like the National Debt Helpline, whose number I absolutely love. It's 1-800-007-007. It's like James Bond is coming to save you with your money.

Jayamanne: That is also one of my favourite resources as well, because I don't feel like a lot of people know about it. And it's a free financial counselling service, which I think is so invaluable for people that might just need a little bit of structure and guidance.

Westcott: Yeah. And they have been reporting that a lot more people are using their services this year, which is so good that people are reaching out. That's one of the most important things you can do. What was interesting is this year, the number of people reaching out for help that would be deemed affluent has really spiked for the first time. So, people earning over six-figures salaries saying, I am underwater here. I need some help reaching out to them.

There's also one called Mob Strong for First Nation Australians that they can reach out to. I'm afraid I can't recall the phone number for that one. But then in addition to that, being on the front foot with your bill providers or your banks is a really smart idea. Don't hide from them. Let them know, hey, I'm in a bit of stress. I want to pay this bill, but I'm going to struggle this month. Is there something we can do? Can we make a plan together? And they will work with you. So, making sure you're reaching out to their hardships team, but please don't go it alone. Utilize the support that's around you. And it will help you get out of this strife, this temporary situation much faster. And that's a good thing to remember too, that this is temporary. This too shall pass, only if you take action though.

Jayamanne: Betsy, there's some really invaluable insights. Thank you so much for coming along.

Westcott: Thank you for having me.


© 2024 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This report has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or New Zealand wholesale clients of Morningstar Research Ltd, subsidiaries of Morningstar, Inc. Any general advice has been provided without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide at You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782.

More from Morningstar
Wisdom from a career in markets
Wisdom from a career in markets
Morningstar Head of Equity Research Peter Warnes reflects on a 61 year career.
ANZ Group and Suncorp
ANZ Group and Suncorp
Our view of the potential acquisition of Suncorp’s banking arm by ANZ.
Our view of CBA earnings
Our view of CBA earnings
Results were strong but are they enough to make the shares attractive? 
Earnings season wrap for retailers
Earnings season wrap for retailers
Two retailers look expensive to our analysts. 
Why we like this misunderstood ASX retailer
Why we like this misunderstood ASX retailer
Most of Bapcor’s earnings aren’t exposed to slowing discretionary spending.
What’s in store for ASX retail stocks in 2024?
What’s in store for ASX retail stocks in 2024?
Morningstar’s Director of Equity Research, Johannes Faul, outlines his views.