With rising interest rates and increasing costs of living, we are being bombarded with stories of gloom and doom as families increasingly battle to feed the kids and pay the mortgage.

We could be forgiven for thinking this is a relatively new phenomenon seemingly happening because of events happening around the world today.   However a quick check of the Australian Government’s Insolvency and Trustee Service of Australia statistics shows bankruptcy figures have been steadily increasing over the last 20 years regardless of the economic climate on the day.  Twenty years ago there were 7,534 bankruptcies Australia wide.  This had increased to 25,961at the end of the last financial year, yet today’s average household wealth is considered to better than ever. 

Just about everyone has found themselves in financial difficulty at some stage of their life.  Some people manage to work through their financial obstacles and come out all the wiser from their experience.  However some people’s money habits never change regardless of their financial experiences and as a result find themselves financially out of control.    What causes people to get into debt? 

An ANZ study found that unhealthy ways of financial thinking played a major key role in people getting themselves into financial difficulties.  Living for today where spenders ignore the consequences of their spending, aspirational spending where people attempt to ‘keep up with the Joneses’, people spending to make themselves feel better, and people relying on credit to provide a lifestyle but somehow forgetting the credit cards need to be paid back at some stage are causing people to live financially unhealthy lives.

It’s no surprise to learn from the study that unemployed households with incomes less than $15,000 per year felt financially out of control.  What was a surprise however was the large number of university educated and skilled households earning an income of more than $90,000 annually who also felt financially out of control.  Perhaps this last group particularly feels the need to aspire to a certain lifestyle. 

There’s nothing wrong with having goals and dreams of where you want to be but take control of your financial health by engaging the services of a financial planner.  A financial planner will help you to develop a savings and investment plan to build long-term wealth and help you to protect your assets.  Good financial advice can play an important role in everybody’s financial wellbeing regardless of whether they are entering or leaving the workforce, and research shows that those who engage in a financial planner are better prepared and feel more in control of their finances.

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

[1] Understanding Personal Debt and Financial Difficulty in Australia, November 2005, AC Nielsen and ANZ

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