Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 344

The link between financial and mental health

It may seem obvious that financial stress would have a direct impact on people’s health and happiness. However, new research from Fidelity International suggests that Australians are not making the link between financial health and our overall wellbeing.

Fidelity’s survey of over 2,000 Australians shows almost half of us worry about money at least weekly, with one in four worrying at least daily. And having money doesn’t necessarily make people immune from anxiety. More than a third of Australians with more than $1 million of assets to invest still worry at least monthly.

What are Australians worrying about?

We have enjoyed more than 25 years of uninterrupted economic growth and Australia has not experienced a recession since 1991. Our superannuation system is the envy of many parts of the world and most people have now been accumulating savings to fund retirement since the Superannuation Guarantee started in 1991, a healthy last 28 years ago.

Despite this, less than one in five Australians rate their financial wellbeing as high or very high. At a time when the economic outlook is starting to look more uncertain, only one in five believe they would be financially stable if they were to lose their job tomorrow, with almost three quarters saying they could only manage for a short period or not at all.

Retirement is also weighing on people’s minds. More than half of Australians feel they are not on track financially to have a retirement they are happy with. Around 50% worry they might not be able to live where they want to in their golden years and a similar number expect to have to keep working past retirement age to fund their retirement.

The adverse impacts are not only financial

Perhaps most surprising is the extent to which these sorts of financial issues affect all facets of our lives. More than half of Australians report that their mental health has been adversely impacted by financial issues, while others say their relationships and physical health have suffered.

The benefits of seeking financial advice

It’s not all bad news. The survey suggests that the picture is improved for people who seek help with their finances. While 56% worry about money at least monthly, that number jumps to seven in 10 for those who do not receive financial advice.

Australians receiving financial advice are twice as likely to rate their level of financial wellbeing as high or very high, compared to those who are not receiving advice. And when asked how prepared they feel for retirement, 64% of people who are advised say they are either ‘very’ or ‘reasonably’ prepared, compared to just 26% of unadvised people.

Perhaps the most compelling finding was in relation to people’s overall wellbeing, 50% of Australians receiving financial advice say their mental health has improved as a result of advice, while 38% reported their family life is better.

So with so many people reporting the benefits of financial advice, why aren’t more people accessing it? Last year’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which revealed practices that fell well short of the community’s expectations, could be one reason. However, the survey shows it isn’t the main deterrent.

A recurring theme among those who have never sought advice is they don’t believe they can afford it or they don’t believe their circumstances justify the need. And when people do seek advice, it is usually around a life event or milestone. Nearly a third of people first sought financial advice because they were approaching retirement, followed by a property purchase.

Don’t wait for the financial trigger

The problem with this that by waiting for a trigger such as retirement to seek help, we may not be giving ourselves the best chance of being in control of our futures. It is only by starting the discussion early and making a plan that we will have control over when we retire, how much we will retire with and what our lives will look like after we retire.

And this is backed up by our survey. While around 26% of people overall say they are not prepared at all for retirement, that number drops to just 10% for those who are advised. And those people who have an adviser also about the positives for their overall quality of life. These include being able to live their desired lifestyle, not having to worry about money and improved mental health.

While much of the discussion around the benefits of financial advice focuses on the amount of assets we have or the financial returns that can be achieved, our research demonstrates the wider benefits and peace of mind it can provide. People who seek advice often leave with a much stronger sense of wellbeing and control over their future and that’s something we can all benefit from.

 

Alva Devoy is Managing Director, Australia at Fidelity International, a sponsor of Firstlinks. This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL 409340 (‘Fidelity Australia’), a member of the FIL Limited group of companies commonly known as Fidelity International. This document is intended as general information only. You should consider the relevant Product Disclosure Statement available on our website www.fidelity.com.au.

For more articles and papers from Fidelity, please click here.

© 2019 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited. FD18634.

 

RELATED ARTICLES

Work still needed to close the financial gender gap

Lucy Brogden on the link between mental and financial health

What do investors value in financial advice?

banner

Most viewed in recent weeks

2024/25 super thresholds – key changes and implications

The ATO has released all the superannuation rates and thresholds that will apply from 1 July 2024. Here's what’s changing and what’s not, and some key considerations and opportunities in the lead up to 30 June and beyond.

The greatest investor you’ve never heard of

Jim Simons has achieved breathtaking returns of 62% p.a. over 33 years, a track record like no other, yet he remains little known to the public. Here’s how he’s done it, and the lessons that can be applied to our own investing.

Five months on from cancer diagnosis

Life has radically shifted with my brain cancer, and I don’t know if it will ever be the same again. After decades of writing and a dozen years with Firstlinks, I still want to contribute, but exactly how and when I do that is unclear.

Is Australia ready for its population growth over the next decade?

Australia will have 3.7 million more people in a decade's time, though the growth won't be evenly distributed. Over 85s will see the fastest growth, while the number of younger people will barely rise. 

Welcome to Firstlinks Edition 552 with weekend update

Being rich is having a high-paying job and accumulating fancy houses and cars, while being wealthy is owning assets that provide passive income, as well as freedom and flexibility. Knowing the difference can reframe your life.

  • 21 March 2024

Why LICs may be close to bottoming

Investor disgust, consolidation, de-listings, price discounts, activist investors entering - it’s what typically happens at business cycle troughs, and it’s happening to LICs now. That may present a potential opportunity.

Latest Updates

Shares

20 US stocks to buy and hold forever

Recently, I compiled a list of ASX stocks that you could buy and hold forever. Here’s a follow-up list of US stocks that you could own indefinitely, including well-known names like Microsoft, as well as lesser-known gems.

The public servants demanding $3m super tax exemption

The $3 million super tax will capture retired, and soon to retire, public servants and politicians who are members of defined benefit superannuation schemes. Lobbying efforts for exemptions to the tax are intensifying.

Property

Baby Boomer housing needs

Baby boomers will account for a third of population growth between 2024 and 2029, making this generation the biggest age-related growth sector over this period. They will shape the housing market with their unique preferences.

SMSF strategies

Meg on SMSFs: When the first member of a couple dies

The surviving spouse has a lot to think about when a member of an SMSF dies. While it pays to understand the options quickly, often they’re best served by moving a little more slowly before making final decisions.

Shares

Small caps are compelling but not for the reasons you might think...

Your author prematurely advocated investing in small caps almost 12 months ago. Since then, the investment landscape has changed, and there are even more reasons to believe small caps are likely to outperform going forward.

Taxation

The mixed fortunes of tax reform in Australia, part 2

Since Federation, reforms to our tax system have proven difficult. Yet they're too important to leave in the too-hard basket, and here's a look at the key ingredients that make a tax reform exercise work, or not.

Investment strategies

8 ways that AI will impact how we invest

AI is affecting ever expanding fields of human activity, and the way we invest is no exception. Here's how investors, advisors and investment managers can better prepare to manage the opportunities and risks that come with AI.

Sponsors

Alliances

© 2024 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.