Debt stress and its associated ill health looms as a core issue for Australians. With over 50% of respondents to AMP’s 2016 Financial Wellness Report indicated that they are not confident about their financial position, and struggle to even meet their day to day household expenses. Debt (50%), retirement (35%) and providing for their family (34%) lead the list of financial concerns for people. Just paying the bills was as high at 32% of all respondents citing it as an issue for them.
According to AMP’s data, 25% of employees (2.8 million people) are facing financial stress, the worst sectors being Accommodation and Food Services; Health and Social Services; and Administrative Services.
While low income is strongly correlated with financial stress (34 per cent of people earning less than $50,000 p.a. under stress), financial stress for high income earners, (earning $150,000 and above), has doubled over the past 2 years.
Australians are struggling with their financial arrangements for good reason. The Australian Federal Reserve reports Australia has the world’s highest household debt relative to GDP: $2 trillion in unconsolidated debt, with a GDP of only $1.6 trillion!
Debt Stress leads to loss in employee productivity
Absenteeism and lost productivity are the knock-on effects of debt stress and its associated health issues for employers. The hospitality and healthcare industries are already significantly impacted. But it is not just employers who are affected by debt stress and its associated ill health. Data from the University of Sydney shows entire families under financial stress suffer poorer health. 28% missed or skipped necessary tests and ongoing treatment; 50% skipped dental appointments; and over 20% did not collect prescriptions (or missed taking their medicines). Children in stressed families have more behavioural problems; may struggle to cope with stressful situations themselves and may have more mental health issues.
Debt Stress can lead to significant health issues
Research from the US reflects how debt stress can lead to physical ill health. Among those reporting high debt stress:
- 27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress.
- 44 percent had migraines or other headaches, compared with 15 percent.
- 29 percent suffered severe anxiety, compared with 4 percent.
- 23 percent had severe depression, compared with 4 percent.
- 6 percent reported heart attacks, double the rate for those with low debt stress.
- 51 percent, had muscle tension, including pain in the lower back. That compared with 31 percent of those with low levels of debt stress.
People who reported high stress also were much more likely to have trouble concentrating and sleeping and were more prone to getting upset for no good reason.
Debt stress is a huge, and growing problem for Australian’s nationwide
Debt Stress impacts individuals; their families; their friends; their co-workers and of course their employers either directly or indirectly.
Debt Stress can result in any combination of financial, emotional and physical damage.
Like it or not, Financial Planners should be asking themselves why they are not addressing the number one inhibitor to Wealth Creation. We see two main options:
- Be proactive and provide a service offering that helps clients and prospective clients to manage their debt stress.
- Miss out on the opportunity to provide strategic advice to the estimated 25% of the population (2.8million people) who are currently believed to be debt stressed and to make a genuine difference to their financial position right now
Bill Butler can help your business create a client service offering that takes the stress out of these prospects financial situations through management of their cashflow, coaching around their debt and payment of their household bills. If you are a proactive Financial Planner seeking to enhance your business opportunities and client success then Speak to Bill Butler today.