Why Is Financial Stress In Australia So High?
We know that money can’t buy happiness but it can help us plan for a happier life. In a recent study*, over 64% of Australians reported experiencing financial stress or vulnerability. Struggling with bad debt, trying to save for retirement and taking care of family are three key factors associated with high levels of financial stress. Millions of Australians are fighting to keep up with the cost of living and over two million of us report high levels of stress and vulnerability when it comes to money. Navigating a complex financial market with limited formal financial education means that many of us are using financial products and services that do not meet our needs and millions more are excluded from the services that will enable them to flourish.
It’s no wonder financial stress levels are high, and rising.
One in two Australians reports having only a basic understanding of financial products and services*. The financial landscape is complex and there is no shortage of information and advice available. With an overwhelming amount of advice at our fingertips, many of us turn to family or friends and adopt the financial behaviours of our parents. While the support of friends and family is vital for the development of financial resilience, our closest confidantes often don’t have the knowledge or resources to help us make the right decisions. When it comes to our finances, it’s difficult to know who to trust and with mainstream and informal providers all out to make a profit, it’s no surprise we often turn to our friends and family first.
But Australians with social connections to lean on and access to financial services should count themselves lucky. One in five Australians has limited or no social connections to turn to in times of financial stress and one in four has difficulty accessing financial services in the first place*. This means that at times of great financial need, many Australians are forced to rely on fringe and informal products which tend to carry high interest rates and further contribute to the stresses of over indebtedness. And mainstream financial service providers aren’t renowned for their care and compassion when things get tough.
This is why I have made it my mission to help people experiencing financial stress and vulnerability. I help Australians choose and use the products and services that will enable them to overcome financial adversity. I help those who have been denied access to the resources they need to change their lives. And I support them every step of the way. Every situation is different. Every client deserves to be heard and to have a financial plan that suits their individual needs. This is often where our mainstream financial system lets us down, knocking us back at a time of great need.
Taking control of your financial wellbeing is not easy. There’s no formal teaching or training on how to best manage debt, save money or select financial providers that best meet our needs. But it’s my mission and my personal challenge to make a change to the way we choose and use financial products and services.
Money can’t buy happiness, but having enough gives us the chance to chase it. If you are feeling the burden of financial stress, please contact me and let me help you build the resources you need to take control.
Disclaimer Statement: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.
Lending Mate™ trading as Free From Financial Worries Pty Ltd (ABN 88 134 812 165), Credit Representative number 442518 is an authorised representative of Connective Credit Services Pty Ltd (ABN: 51 143 651 496), Credit License number 389328.
5 Steps To Help You Plan Your Financial Future
We count on a few key things to lead happy lives. Our health, our relationships and our financial wellbeing. We spend time on our physical fitness and take time to socialise, but when is the last time you spent time on your financial fitness? Planning for your financial future and building your financial resilience now will help you better respond to life’s unexpected challenges. There are many things the financially fit are tending to—budgeting, home loans, investments, debt management, insurance, superannuation, tax, income—but it’s difficult to know what your financial priorities should be.
A simple place to start is by preparing a budget.
The word budget word signals scarcity and sacrifice but we should see budgeting as an opportunity to align our financial behaviours with our goals. At the end of it all, life is to be enjoyed so we have to strike a balance between spending now and saving for the future.
Set goals for your finances and your budget becomes a roadmap. Take time to consider what your ultimate financial goal would look like. Write it down. Then think about a few short term goals that will set you on that path. Maybe it’s paying off your credit card by the end of the year, shopping around for lower interest rates or reading a book on investing. By being clear about your goals and values you can take control of not just your bank balance, but your life.
There’s a few things you can do to get started on your road to wealth health!
- Establish a fund for emergencies: work towards putting away about half a year’s wages in a savings account you can tap into for medical or personal emergencies. Shop around for an account that offers a balance of good interest and flexibility. If you have future expenses you can anticipate, like car registration for example, you should start saving now. You can also use the accumulated interest from this account to start investing in property, money markets or the sharemarket.
- Reduce your expenses: monitor your bank statements and cash flow. Cut waste and shop around for better deals on your credit cards, interest rates and utilities. You’d be surprised what’s up for negotiation! Reducing expenses doesn’t have to mean giving up everything you enjoy, but it’s crucial that you oversee your outgoing expenses and keep within your means.
- Build your financial literacy: 1 in 10 Australians reports having only a basic understanding of financial products and services*. The lack of formal financial education in Australia means many of us are using financial products and services that are at best unsuitable and at worst damaging to our financial wellbeing. It’s my goal to empower my clients with the skills and knowledge they need to navigate this complex market and see past savvy marketing. The more you know the faster you will reach your goals.
- Talk to a professional: planning for your financial future is not easy.
The market is complex and it’s difficult to know who to trust. It’s important to seek objective advice from experienced financial professionals to ensure that the recommendations you are given are in your best interest. - Better manage your debt: saving money can seem like a lofty goal when you’re overwhelmed by debt. Household debt is on the rise in Australia and so is our sense of financial vulnerability. Assessing your debt and renegotiating repayments can help you on your way to a debt free future and alleviate some of the financial pressure that comes with over indebtedness.
Life is full of uncertainties but one thing is for sure, there will be challenges. Building financial resilience now gives us one less thing to worry about in a moment of crisis. It’s never too late to take control of your finances and the positive changes you make will serve you now and into the future.
*http://www.nab.com.au/content/dam/nabrwd/About-Us/corporate-responsibilty/docs/nab- resilience-summary-report.pdf Pg.3
Disclaimer Statement: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.
A Dream Home Rollercoaster Ride Ends In Success
Sue and Steve were looking to buy their dream home. With only $80,000 left to pay on their mortgage for a home valued at $400,000, they had the equity they needed to search for a new home — or so they thought. A perfect property popped up for $750,000 and while it may have been just slightly over their budget, Sue and Steve were willing to do whatever it would take to secure their dream home. They both approached their lender, a company the couple had banked with for over 20 years and had held their current home loan with for 15 years, never defaulting once.
But their application for the new purchase was declined because of a $2000 default on a credit card Sue previously held. After this unsuccessful attempt they thought the lender may offer another option to assist them, but the bank went silent. After weeks spent waiting for an update, Steve was forced to call back and look for another way to get his family their dream home. He offered to put the loan in his name, but he too was knocked back because of a $1500 default on land rates. Sue and Steve were left feeling shocked and frustrated that after doing business with this lender for more than 20 years, they were turned away without care or consultation.
After the lender declined their applications, Sue and Steve’s real estate agent recommended someone he knew at another Major lender. He said he could guarantee their loan would be approved and minor defaults wouldn’t affect their application. But they were knocked back again.
The couple approached a third large lender on the recommendation of another real estate agent and again, the bank declined based on the couple’s minor defaults. This time, the bank didn’t even bother to contact them!
Every time the couple submitted an application they were upfront and honest about why they had been previously declined. Each time the bank made them feel safe by assuring them they would qualify for their company’s loan. But after they had been declined the banks didn’t want to know them any more, no alternative options were given and Sue and Steve were left questioning whether they would ever make it into a new home.
Before all hope had vanished, a caring real estate agent put Steve and Sue onto Peter from Lending Mate. Sue described him as a “godsend”. Peter’s empathy and understanding was a welcome change from the lack of care shown by the previous banks. Peter found the perfect loan for the couple’s circumstances and working with their legal Representative helped Sue and Steve understand the legal parameters of the loan. He stayed in constant contact throughout the entire process, offering support, guidance and updates on the progress of their application. Peter had the family in their dream home just in time for Christmas.
“Without Peter’s help and commitment I don’t think we would have been able to buy this house.” – Sue Hartman
Disclaimer Statement: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.
Lending Mate™ trading as Free From Financial Worries Pty Ltd (ABN 88 134 812 165), Credit Representative number 442518 is an authorised representative of Connective Credit Services Pty Ltd (ABN: 51 143 651 496), Credit License number 389328.
Why should you follow the 5 C’s of credit?
While the post-crisis financing landscape has changed drastically and landing a business loan today is more challenging than it was, it’s far from impossible, especially if you make sure your business measures up to what bankers call the “five C’s of credit“:
Character
Banks don’t lend money to inanimate objects. They lend to business owners, and they usually want to know more about the owner than financial numbers. This means you and your management abilities. Do you and your key executives have a strong reputation in your community and industry? Do you treat your customers, vendors, and employees with courtesy and respect? This includes taking responsibility for your actions and the outcomes (both good and bad), as well as meeting all of your obligations, even when it might not be in your best interest.
Capacity
This means your company’s ability to safely assume more debt, a measurement known as debt-service capacity. Your banker will calculate a few key financial ratios with information culled from your financial statements to determine how much more debt your business can safely assume.
Capital
This refers to how much cash and hard assets your business has on hand. Your banker may calculate a measurement known as the cash-conversion cycle, a liquidity measure that combines several ratios derived from your financial statements.
The cash-conversion cycle will reveal how much working capital you need to run your business, without running out of cash. Also keep in mind that banks usually like to see that business owners are personally invested in their companies.
Sweat equity is one thing, but bankers tend to be more receptive to loan requests from business owners who have some skin in the game.
Collateral
Most business borrowers today will be required to pledge a secondary source of repayment, or collateral, in case they default on a loan.
Banks usually prefer hard assets (such as real estate and equipment) as collateral, because they can convert them to cash more easily if they have to, rather than raw materials or unfinished goods. If yours is a service business, you may be required to pledge personal assets- usually your primary residence- as collateral to support a loan.
Conditions
These are the economic conditions in the broad national economy, in your local geographic area, and in your specific industry. They will vary, of course, often considerably, in different areas of the country and in different industries.
While trade-exposed industries such as manufacturing and retail sectors are struggling in light of the strong Australian dollar, others- notably the resources industry- are booming, despite the overall sluggishness of the economy.
We would not hesitate in recommending Peter Ellis
We would like to extend our thanks for Peter’s assistance and professional financial advice while selling and buying our home. What should have been a very stressful time…. at no stage was the case. Peter’s financial knowledge, efficiency and attention to detail made choosing our new financial lender and completing all documentation a breeze. We would not hesitate in recommending Peter Ellis and look forward to continued business in the future.
Brett & Mel – Lilydale
Above and beyond the call of duty
I just wanted to take this opportunity to say a big thank you for all you have done.
You have gone above and beyond the call of duty. Steve and I are really appreciative of all of the hard work you have put into finding the right lender for us. This you say is just part of the job, but with your kindness and never ending patience we have been able to fulfill part of our dreams (tattslotto is the other half lol).
Thank you again.
Sue H – Victoria
A pleasant surprise after dealing with the bank
Just a quick message to say a big thank you for assisting me from start to finish with consolidating my loans – thanks for your friendly professional service – a pleasant surprise after dealing with the bank. It’s great to have just one loan & monthly payment now and the extra money for the renovations has allowed me to complete my backyard blitz. 🙂 Thanks again for making everything so easy.
Trudi – Victoria
Made the process stress free
We would highly recommend Peter as a Mortgage broker. From the first meeting with Peter when we wanted to try and get finance for a home loan, he made us feel at ease and made the process stress free. We were really impressed by the professionalism and prompt assistance that Peter would provide when we had questions (we had heaps!). With previous attempts of meeting with the bank or other mortgage brokers it was a daunting experience and we felt like we were being judged. Peter was much different, he was all about helping us to get across the line and get the loan approval that we were seeking.
Svenja & Justin – Victoria
Hands on and thorough
Peter is very much hands on and thorough in his approach and enable the process to be short and sure. He is very friendly and considerate and he makes himself available every step of the loan process.
Rachel & Joe – Pakenham