You are not alone if you worry about your financial situation.

A recent Household Financial Comfort Report stated that around 30% of households felt their financial situation worsened in the past year.

That is a concern, especially considering we have been in one of the lowest interest rate periods in history.

How do you know if you are in, or heading towards, financial stress?

You may be experiencing financial stress if you:

• have little or no savings
• avoid opening bills or bank statements
• have mounting expenses that your earnings don’t seem to cover
• are in arrears with your loan or credit repayments
• are adding to your credit card debt to pay for everyday expenses (or indulgences)
• need to keep borrowing money to survive day-to-day living
• can’t afford an unexpected bill

Of course, there are varying degrees of financial stress. Regardless of where you sit today, facing your financial fears and making changes to how you manage money are the only ways to turn things around.

Five practical steps to turn financial hardship into relief

It may sound annoying or time-consuming, but your mindset can shift quickly when you start tracking your expenses.

Most of us don’t realise how much we actually spend week to week. When you can see it clearly in front of you, it is easier to make better decisions.

You can use:

• an online expense tracking app
• a simple spreadsheet or notes app on your phone
• your lender’s own expense-tracking tools inside internet banking (many banks now include this)

Start by checking your last month of bank statements. Tracking makes you stop and review your spending, and it also makes you accountable. That alone can help put the brakes on unnecessary purchases.

If you are not naturally drawn to detailed budgets, a simple “bucket” strategy with different bank accounts can work well.

You might allocate a percentage of your salary into separate accounts for:

• everyday expenses (groceries, petrol, bills)
• home loan and fixed commitments
• savings and emergency funds
• Learn how to structure your offset accounts →

It is also worth looking at whether your current bank accounts are costing you money in unnecessary fees. For some clients, moving to low or no-fee online or transaction accounts creates easy, ongoing savings.

Regularly reviewing your recurring services can uncover hundreds, or even thousands, of dollars a year in savings.

Consider reviewing:

• electricity and gas providers
• pay TV and streaming services (Stan, Netflix, Foxtel and others)
• home and contents insurance
• private health insurance

For private health cover, you can compare policies on the government website at privatehealth.gov.au.

These adjustments can add up to significant savings. Even a one-coffee-a-day habit can cost between $98 and $140 per month. That is up to $1,680 a year. Buying lunch most days on top of that can easily take you into the thousands.

If you currently have a mortgage and haven’t reviewed your interest rate in a while, it is worth having a conversation. For many households, the home loan is the single biggest monthly expense.

By reviewing your home loan and other debts together, we may be able to:

• secure a sharper interest rate
• consolidate high-interest debts into a lower-rate home loan
• simplify your repayments and improve cash flow
• set up an offset account or redraw strategy to reduce interest over time

If your mortgage has recently come off a fixed rate (or is due to), it may be possible to move to a more competitive fixed or variable option before further rate changes. A home loan review can be a powerful way to relieve financial pressure.

If you are a property investor with a negatively geared investment property, and you are not already using the PAYG Withholding Variation, this may help smooth your cash flow.

This ATO option can reduce the amount of tax your employer withholds from each pay, rather than waiting for a large tax refund at the end of the financial year.

For more details, review the information on the ATO website or speak with your accountant about whether this strategy suits your situation and goals.

Remember, you do not have to navigate this alone

As your finance specialist, we are here to help you understand your options and put a plan in place.

We regularly work with clients who feel overwhelmed by their current financial position. With the right advice, many are able to restructure their debts, free up much-needed cash flow and move from “constant worry” to a clearer path forward.