Way Forward reveals mental toll of financial hardship on Australians

David Berry, Chief Executive Officer at Way Forward Debt Solutions

Way Forward, Australian debt support charity released a new report on the complex negative impacts of unmanageable debt has on Australian mental health, worsened by the pandemic.

Way Forward: Quantifying the mental toll of debt stress report explores the experiences of Australians in financial hardship and committed to a debt repayment plan with Way Forward.

These Way Forward exclusive insights were gathered from recent 23 semi-structured interviews and an anonymous survey completed by 63 Way Forward customers countrywide.

Key findings of the Way Forward report included the following.

  1. Sufficient savings to meet two weeks’ expenses (over $1,000) lower levels of stress
  2. Higher income doesn’t protect from financial worry
  3. A realistic debt repayment plan provides hope to press forward despite challenges

Money equals worry to most in financial hardship

Majority of respondents (76%) worry about money all the time or regularly and from these respondents, 86% feel the impacts on their mental health at least weekly.

42% of those constantly worried about finances say their finances impact their mental health.

Majority of customers, (83%-90%) are confident that they can meet their financial obligations and gain control of their finances now they have a realistic repayment plan in place.

However, 61% didn’t know what they would do if their income suddenly reduced by a third.

This suggests the confidence a realistic debt repayment plan and budget can provide to someone in financial hardship, despite extremely challenging financial circumstances.

Savings protect from debt stress

Having a financial buffer can provide reprieve in an otherwise stressful situation.

Over 65% of the Way Forward research’s respondents had less than $1,000 savings in the bank. Way Forward found this issue is more especially prominent among women.

The lack of savings has a negative impact on mental health, as nearly all (95%) respondents with under $1,000 of savings either worry about money all the time or regularly.

The Way Forward research found only 29% of those with over $5,000 in savings regularly worry over finances, suggesting that savings create an efficient barrier against stress over finances.

More income doesn’t stop money worry

The Way Forward research data revealed that people earning below $35,000 and between $150-$250,000 per year experienced the highest levels of stress about money.

This Way Forward report’s data therefore indicates that all Australians tend to worry about money and the amount of worry does not reduce regardless of their income increasing.

Executive commentary on the Way Forward report

Way Forward CEO David Berry said, “By investigating experiences of Way Forward clients, we found a high correlation between experiencing financial hardship and poor mental health.”

“Financial hardship has been identified as a very significant burden for many Australians and the situation is getting rockier and harder with the successive waves of lockdowns.”

“It is therefore time for the industry and legislators to acknowledge the severe and paramount impact of financial debt on mental health, thus the need to work towards a path forward.”

“While we are particularly grateful to financial institutions for supporting the population through the COVID-19 pandemic, payment moratoriums cannot be the only support offered.”

“Way Forward discovered that a particular worry is the lack of support for unsecured debt. This therefore has left many Australians countrywide to battle complex, bad debt on their own.”

“By releasing this report, Way Forward wants Australians struggling with debt to realise they are not alone. It’s natural to feel stress and anxiety over money in these circumstances.”

“We want to remind clients that help is out there and having a realistic repayment plan to end the cycle of debt can make all the difference in reducing anxiety that comes with debt stress.”

­“The Way Forward team of well trained financial hardship advocates offers free support so that more Australians can find their way forward towards financial freedom.”

“Give us a call to see how we can help you find a way forward,” concluded David Berry.