It's not what we earn
This blog is based on the podcast season 2 episode 6, discussing financial stress and how higher income does not mean lower stress about money. In fact, it’s the opposite.
Money, Perception, and Reality
In today's fast-paced world, our relationship with money is complex. It's not just about the numbers on our bank statement; it's about how those numbers make us feel, our behaviour and relationship with money, and how we perceive others based on their financial status. As finance professionals with years of experience, we've seen firsthand how money can affect people's lives, health, and relationships in profound ways.
When you work in finance, you become accustomed to dealing with large sums of money. 💰💰💰
Whether it's helping clients with mortgages or financial planning, the numbers on the page can start to lose their meaning. You might look at a figure like $250,000 and see it as just another number, disconnected from the real-life implications it has for individuals and families. That’s why there’s no ‘judgement’ about your numbers from finance people. For us, it’s not about the numbers, but your overall financial wellbeing.
Societal Expectations and Financial Pressure
There's often a perception that earning a high income equates to financial success and happiness. 📈However, this couldn't be further from the truth. People at all income levels experience financial pressure, whether it's managing day-to-day expenses or planning for the future.
👉🏼 People have a habit of spending what they make. Living up to their income.
Think about the last time you got a pay rise. Were you one of the small few that set up an auto-transfer to move that money into a separate account and continue living on the same money, or did you let that just soak into your household spending? 🍜
Employment Hero reported in 2023 that 46% of Australians struggle to pay for food and rent before payday. Now that’s significant. Who are those people, do you know them? Are they your friends, family, co-workers or neighbours? 🧐
The pressure to maintain a certain lifestyle can be immense, leading to stress and anxiety, regardless of how much someone earns. 💵 Data from a NAB report in 2023 shows that Australians in the $100K - $200K income bracket reported the highest level of anxiety. This is primarily due to becoming overcommitted with financial commitments as the increases to wages hasn’t nearly kept pace with the rises in cost of living and mortgage interest rates in the past 18 months. The impact from decisions made 2 years ago are now feeling almost unsustainable for people in mid 2024. This combined with the social pressures we have to keep up with their friends, family, and the previous social expectations we had for our lifestyle that may no longer be even possible, adds to the stress that is being felt in particular by this group.
Breaking Down Stereotypes and Judgments
One of the most significant challenges we face is breaking down stereotypes and judgments surrounding money. There's often a stigma attached to certain income levels, with assumptions made about people's lifestyles and values based on how much they earn. This can create barriers to honest conversations about money and financial wellbeing overall, leading people to ‘pretend’ and to ‘mask’ when it’s not really what’s going on. This is dangerous because we know debt compounds over time, and the spiral is all to real for those already in financial stress.
NAB reported in December 2023 that women have higher financial stress than men, with the “stress gap” widening to its largest in over two years. 🚺 And we know there’s a huge link between mental health and financial health.
37% of Australians reported that cost of living pressure was the issue having the greatest negative impact on their mental health - more than any other issue in 2023. Beyond Blue 2023
The Importance of Compassion and Understanding
At the heart of it, money is just a tool. It’s an enabler to live the life we want. It shouldn't define our worth or our happiness. Instead, we should focus on treating each other with compassion and understanding, regardless of our financial situations. Whether someone earns $30,000 or $300,000, their value as a person remains the same. 🫶
The Power of Open Conversations
One of the most powerful ways to break down these barriers is through open conversations about money. 📣 By sharing our experiences and challenges, we can support each other and reduce the stigma associated with financial struggles.
It's okay to talk about money openly and honestly, without fear of judgment. In fact, by talking about it honestly with vulnerability can help create that safe place for others who might be struggling but feel too ashamed or too guilty or embarrassed to reach out or show the true picture.
👉🏼👉🏼👉🏼 Start by asking yourself whether you are a financially safe person for those around you, and in what ways you can improve your own level of financial wellbeing.❓
At The Money Collective, we are passionate about helping people understand their numbers. What’s your income minus your cost-to-live? Do you know what your have-to expenses are to survive, versus your discretionary spending money?
Simply knowing your numbers is one of the key steps to improving your own financial wellbeing. To know more or get started changing your own relationship with money, check out our 12 step online course here: https://www.themoneycollective.com.au/onlinecourse
So why talk about money?
✅ We build and grow our own skills, comfort level, and confidence in talking about money the more we do it
✅ We show vulnerability and honesty about a traditionally taboo or secretive topic
✅ We set the expectation about what we want for our money
✅ We become more accountable to our goals, vision, and values the more we share them
✅ We give others the opportunity to connect with us on a deeper level
✅ We give others new ideas for the way they think about and use their own money
In Summary
Money is a powerful force in our lives, but it's how we relate to it and each other that truly matters. It’s imperative to be honest and let go of the secrecy, taboo, guilt or shame when talking about money. Instead, let’s get to know our numbers and empower ourselves to learn about our money so we have better financial wellbeing. Lastly, let's treat each other with kindness, compassion, and understanding, regardless of our financial situations and empower each other to live the life we want 💪.
Listen to the full podcast here: https://www.themoneycollective.com.au/podcast
This article provides general advice only. It does not take into account your objectives, financial situation or needs. Before acting on any information provided, you should consider the appropriateness of the information and the nature of the financial product in regards to your objectives, financial situation and needs. We recommend discussing your personal situation with a financial professional.
Blog article by:
MEL PEARCE
Co-Founder, Financial Wellbeing Coach and Mortgage Broker
The Money Collective