About a third of Australians are financially stressed with women consistently reporting more anxiety about money, according to the latest snapshot into the mental health system.
It followed a period where prices have risen by more than 20 per cent in five years, and the Reserve Bank of Australia raised interest rates more than a dozen times.
It left Sara Jane Hammond, 45, recalling memories of watching her father go bankrupt before she even started high school.
Facing her own financial anxieties decades later, Ms Hammond began making changes to find the financial stability and independence that has been drummed into her psyche.
Over the course of the past two years, she skipped meals, cancelled her gym membership, moved in with her partner, and sold her home in Brisbane.
“We actually decided that we were going to put my place on the market,” Ms Hammond told the ABC.
“I sold that so that we could pay off my partner’s mortgage and try and be debt-free.”
Inflation has been falling but people still feeling the impact
Since reaching its peak in 2022, inflation has continued to ease. At the moment, headline inflation is at 2.1 per cent.
The “trimmed mean” measure of inflation, which is the Reserve Bank of Australia’s preferred measure of underlying inflation, also declined from 2.9 to 2.7 per cent.
Between 2022 and 2023, the RBA lifted interest rates 13 times.
It coincided with a period where Australians were more financially stressed than they were at any time before or during the pandemic, according to an Australian National University survey of about 4,000 people.
The most recent look into Australia’s mental health system by the National Mental Health Commission found more people were finding it difficult on their current incomes.
Between 2020 and 2024 financial stress almost doubled from 17.1 per cent in November 2020 to 34.6 per cent by January 2024.
What is financial stress?
Financial stress often occurs when people find it difficult to keep up with living expenses.Â
The signs can include:
arguing about moneydelaying health care due to costfinding it difficult to sleepexperiencing mood swings.
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The report also found more people were delaying or not seeking mental health care because of the cost.
Ms Hammond, who is an osteopath, was not immune. She said she saw her income fall by about $1,200 a month.
Her situation was complicated by being self-employed, and demand for appointments started to wane.
It led to her having to make a decision she did not want to, and forgo her retirement safety net earlier this year.
“As a sole trader trying to prioritise putting money aside for super has been a challenge,” she said.
“At least we will have combined superannuation, but I’m way behind compared to what [my partner’s] at.
“I don’t want to be a multi-property tycoon or anything like that, but it was to be our nest egg.”Cost of living made worse by wage stagnation
Monash University’s Anthony Harris, who runs its Centre of Health Economics, said the cost of living crisis has not been helped by more than a decade of flatling real wages.
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“It’s been a period when real wages have been falling for maybe a dozen years. So there has been quite a ratchet down in people’s real income,” Professor Harris said.
That’s been backed up by research from think-tank Per Capita who found Australians were still living with the consequences of severe wage stagnation from 2012 to 2022.
Researchers estimated the average yearly wage today is almost $12,000 lower than it would have been if wage growth had kept up with its historical average in that period.
Professor Harris added the combination of wage stagnation and a period of high inflation could have an impact on people’s health outcomes.
“If you’re really financially stressed, it means that sometimes you can make [poor] decisions,” he said.
“The lack of ability to buy things can [also] lead to food insecurity and energy poverty, which directly has an effect sometimes on your ability to buy healthcare or to buy healthy foods or exercise.”
Recovering from financial stress, and coping with money dysmorphia
The worst of high inflation may be over with some experts saying a rate cut at the next RBA meeting was almost a “done deal”.
But for the Australians who experienced that tumultuous period, such as Ms Hammond, they were only now beginning to recover.
University of Western Australia’s Kristin Gainey said people should be mindful of what they could control.
Dr Gainey, who is a registered clinical psychologist in the US, added stress manifested differently for people.
She said just as people’s resources were stretched so too were their emotional capacity.
“Sometimes people are already doing everything they can, that a lot of it is out of their control,” Dr Gainey said.
“Then I think turning to other kinds of coping, like support from family and friends, some acceptance around the larger context and things that are out of your control.”
But the scars of financial stress do not just go away, they didn’t for Ms Hammond.
“We are in a relatively good financial position 1754857748,” Ms Hammond said.
“[But] I see so much homelessness and so much struggle for everybody at the moment … its hard to watch what’s going on in Australia.”
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Money dysmorphia is not an official diagnosis but the term has gathered momentum, particularly online, as people struggle to make ends meet.
It has been described as a disconnect between people’s perception and the reality of their financial position.
Dr Gainey explained major financial shifts often can have longer term impacts on people’s relationship with money.
“So I think with things like money dysmorphia a part of it is that no matter what position we’re in financially, there are always people who can look to have more,” Dr Gainey said.
“So I think going through kind of a stressful period like that then makes people a bit more sensitised to [questions like], ‘do they really have enough?’
“The reality is there is no amount that would make us a hundred per cent certain that we’re definitely going to be secure.”