Money troubles are often cited as a malevolent force in society – responsible for the breakdown of marriages, unhappiness and enslaving you to a job that you perhaps hate.
Whilst all of this can be true (and unfortunately is for too many people), many of us don't realise it can work in reverse too.
If you're stressed about your job, your relationships or marriage or your general well-being – its likely to have a deleterious effect on your personal finances. I was alerted to this worrying reality by a recent article from one of my Foolish colleagues over in the States – who stated that around 58% of Americans say 'their finances control their lives'.
These two insidious forces feed off one another, and the results can be awful.
So I thought I'd do some digging on how we're coping with the relationship between stress and money down under.
According to a study by Mortgage Choice, 56.8% of Australians (close to 3 in 5) are worried about their current financial situation. Of these, 39.4% said that the rising cost of living was the single greatest concern for the next twelve months.
The study also notes that 40% of Aussies see ourselves as more financially knowledgeable than we really are.
Ouch.
What causes financial stress?
A large part of this stress no doubt comes from the stagnant wages that the Australian economy has been providing for at least the last ten years. According to the ABC, wages growth in Australia is projected to stay at around 2.2% – which is really around zero when you account for inflation.
But if 40% of us think we're better at managing money than we really are, then that's really only part of the problem.
And if you're stressed about other things in life, you're likely to try and take comfort with 'buying stuff' – which will probably make your problems worse in the long run. You might even turn to drinking, smoking, gambling or other vices that are terrible for your wallet (and health).
I think the best way to deal with financial stress is making sure you don't spend more than you earn. Having debt is the fastest way to undermine you and your family's financial well-being – so paying off any loans, credit cards or Afterpay Ltd (ASX: APT) debts is a great first step.
And once you've done that, perhaps you can focus on building wealth – maybe even through ASX shares (a favourite topic at the Fool).
But if your own personal issues are ruining your financial life then, of course, it's important to get on top of that as well by whatever means necessary.
Foolish Takeaway
The good news is that a sound financial footing can help ease stresses in other parts of our lives. So I think building a solid financial foundation (and perhaps accepting that we might not know as much as we think we do) is a great first step. Money doesn't bring happiness, but it can buy you time to focus on what can.
