Want to start the New Year in a less stressed state of mind? Money is right up there with health and jobs as a key source of stress for many Australians. Get expert advice from Senior Financial Adviser and Smashed Avocado podcast host John Purl on how to change your mind about money and make it less of a worry for you.

What’s keeping you up at night?

If you’re like most Aussies, having money on your mind stops you getting a good night’s sleep. According to UBank’s latest Know Your Numbers survey, more than half of Australians (59%) are kept awake at night by money worries. Their survey also shows these concerns are largely due to the fact that 86% of Aussies are literally in the dark about where they stand financially. “The Know Your Numbers Index found 86% of Australians are unaware of monthly expenses, which can cause financial problems over time,” says Ubank CEO Lee Hatton.

So it seems a few sleepless nights could be avoided simply by paying closer attention to what we’re spending from month-to-month. But another piece of research into impact of financial stress shows the problem goes much deeper. With their 2017 survey of more than 1000 Australians, Financial Mindfulness commissioned Core Data to explore just how much money stress can affect quality of life. They reported almost one in three people suffer from significant financial stress. Not only is this causing lost sleep, it’s putting them at greater risk of poor health outcomes, angry outbursts, arguing with their partner over money and even turning to drugs or alcohol.

Is more money the answer?

As well as showing just how tough life gets when you’re anxious about money, the survey demonstrates that a higher income is no protection against financial stress. According to the survey, people on an income up to $150,000 and with investments up to $750,000 were only slightly less stressed about money than those earning up to $90,000 and with less than $350,000 invested.

“This goes to show a higher income and more wealth aren’t always the remedy for financial stress,” says John Purl, Senior Financial Adviser for Affinitas Capital and co-host of podcast Smashed Avocado. “Your actual financial position can make a difference. If you don’t have enough to cover food, education, clothing and medical expenses and put a roof over your head, more income is definitely going to take away a major source of stress just by allowing you to provide for basic needs. But beyond that, more income doesn’t deliver greater happiness. Numerous studies show earning more than $100,000 a year just opens the door to buying more expensive things – a Porsche instead of a Nissan for example.”

Understand what you truly value

Having worked with many people to solve financial headaches they have in spite of a high income, John has seen what drives them to keep spending to the absolute limit of their finances and experience stress as a result. “I’ve definitely seen clients who rely on borrowing to keep pursuing whatever it is that can shore up their status,” says John. “It might be a $20,000 bike they can ride with pride alongside others in their social circle or profession. Or buying the bigger house in the better neighbourhood. Most of these purchases aren’t driven by genuine personal values or priorities. It’s about keeping up with the Joneses and that’s a goal they may not reach.”

This is why John makes values the first item on his agenda. “It’s no good talking through the numbers until you’ve discussed why they’re spending that way in the first place,” says John. “A lot of the time these are people who didn’t come from money and they certainly didn’t suffer as children because of it. So when you ask them why all this stuff is so important, they start to question their behaviour. Of course it can be about giving your children a better life, which is a very positive motive. But if that means having stressed, anxious and distracted parents, you’ve got to ask whether a more expensive lifestyle is really more important for kids than the wellbeing of Mum and Dad.”

Take action

John has always found this values conversation essential for clients to succeed in following through with an action plan. “You’ll struggle to get anyone to stick to a cash flow, budget or savings plan, if it does not align with their true values,” says John. “The values conversation has the greatest impact on their motivation to make changes. Then you can follow up with a specific process to determine what needs to change.

“It starts with a look at cash flow – money in and money out – to get to a realistic budget for expenses, that doesn’t go overboard on luxury spends. Then we look at debts, good and bad, to develop a plan to reduce those, with the highest interest coming first. And the final piece is linking progress with these plans to agreed values and goals, giving the client a compelling reason to follow through.”

Choose your influencers

In John’s view, the people you spend time with play a very important role in fueling or limiting financial stress. “A phrase I’ve found to be really true is that we’re the by-product of the five people we surround ourselves with most of the time,” says John. “They’re just as critical to your success in shedding money stress as the steps you’re following to get a grip on your finances. Being with people who value and buy ‘things’ means feeling the pressure to do the same even if that goes against your values. When you’re really committed to living a different way, re-evaluate your circle. It might seem harsh, but it’s important to understand that they’re going to influence how you handle money.”

“If you’re serious about reducing your stress around money, look to build an external council you can lean on as you go about these financial and lifestyle changes. Engage with friends who’ll keep you honest about controlling spending. And working with professionals like a wealth adviser or hands-on accountant who brings new ideas as well as support towards your goal of reducing your financial burden and the stress that goes with it.”

Looking to reduce your financial stress levels? Get tips from a professional on how to plan ahead with your finances so you can worry less, here and now.