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The impacts of money and social media on your mental health

If you’re worried about money right now, you are not alone. Navigating through financial hardship or unprecedented times can cause significant stress to you and your family. A study conducted by Australian Psychological Society reported that personal finance is one of the main causes of stress for Australians.

For some reason, seeing our friends (or even just people you follow) living it up and holidaying in sunny destinations whilst we catch the packed train home in winter, strangely doesn’t fill most of us with instant glee! The term FOMO (Fear of Missing Out) was coined for a good reason, but what impact is FOMO having on our finances and mental health?

The impact of mobile devices, Facebook, Instagram, and FOMO!
Social media can be a great way to stay in touch with friends, brands and media outlets – as it allows us to keep up to date with their latest news. A recent study by Roy Morgan found that the average Australian aged over 14, spends almost six hours on social media every week. On average, a 14 – 24-year-old Australian female spends 14 hours a week, almost two hours every day, on social media.

It’s now very common to see couples on their phones whilst eating at a restaurant or people walking down the road with their head buried in their screen. Interestingly, most posts we view insinuate the idea of spending money and not saving money. Images of new cars, new clothes, fancy restaurants, and holidays fill our online feeds. Without realising, it can become demoralising to be constantly viewing other people’s spending, whilst you ‘go without’ or allocate your expenses elsewhere to stay on track financially.

So how much is mental health impacting our society?
According to Zurich, mental health is impacting 1 in 5 Australian’s each year. They have also released the below statistics:

  • Mental health conditions are the largest single cause of disability in Australia, accounting for 24% of the burden of non-fatal disease
  • The most common mental health conditions are anxiety disorders, mood disorders (including depression) and substance abuse disorders
  • 45% of Australians will experience some form of mental health condition in their lifetime
  • 20% of Australian adults will be affected by a mental health condition every year, with 8.5% of Australian adults experiencing more than one mental health condition at the same time
  • Half of Australian adults who experience a mental condition are not accessing regular treatment, and others may be receiving inappropriate or ineffective care

How mental health is shaping Australia’s insurance industry
A revolution in the treatment of mental illness as a medical condition had led to an explosion in mental health-related insurance claims. In September 2019, Australian Prudential Regulation Authority (APRA) revealed that the insurance industry had lost over $1billion on income protection and total permanent disability (TPD) claims in the previous 12 months.

According to a life insurance insights report published by KPMG, $750 million of all life insurance claims paid in the 2018 calendar year related to mental health. The same report states that mental illness was the number one cause for TPD and number two cause for income protection.  As a result, insurance companies are adapting their policies to cater for mental health claims and they also applying more stringent investigations before putting policies in force.

Be kind to yourself and focus your spending on the things that matter
Purchasing items or services with the intention of sharing it with the world is not always a recipe for happiness or long-term financial success. Spending money for the purpose of attracting more likes might give you a quick “ hit” of satisfaction, however once that feeling subsides this type of purchase can often leave you feeling deflated, as you realise you’ve drifted further away from your financial goals.

Understanding what’s important to you and prioritising spending in these areas, is often a great way to find long term happiness and achieve financial success. When working with our clients we suggest they prioritise the following:

  • Spending’s not bad but focus on things that matter – Identify the things in your life that are important to you and set realistic goals to achieve them. If going on an overseas holiday is a key objective, then make the plans early and start saving towards your goal. Staying home a few Saturday nights isn’t that bad if you know you’ll be on a beach in Europe later that year! The same applies when it comes to larger financial goals, missing out on certain luxuries won’t bother you as much if it means you’ll be able to save for your first home or investment property
  • Most people only post their highlights – Remember most people only post the very best parts of their lives on social media, however you can bet they also have their average days too. The important thing to remember is that most of these times just don’t make their social feeds! When you’re viewing other people’s highlights, remember they usually represent just a small fraction of their lives and not their day to day reality. If you’re disciplined with your spending, your turn will come around soon enough
  • Prioritise the people in your life that matter – We all have people in our lives that don’t always bring out the best in us. Focusing more of your time with people whose beliefs, goals and behaviours closely mirror who you want to be, is a good way to limit destructive behaviours. These people are usually the ones who want to see you succeed, both emotionally and financially
  • Be honest with how social media makes you feel – If viewing posts from certain people or brands makes you feel negative, then maybe it’s time to unfollow them. Additionally, if you feel you’ve become a slave to your Facebook or Instagram account, then it might be time to restrict your usage or even take a break from social media all together. Use the extra time to focus your energies on more productive habits such as exercise, reading, meditation or things that make you happy like spending quality time with family and friends

How developing a budget can relieve stress and help you achieve your financial goals
Organisation and planning for future events or expenses is the best way to allow you to feel confident in your financial situation. It’s not necessarily about how much money you earn; it is about what you do with your money that will impact your long-term wealth and happiness.

Learning how to budget is a great starting point to managing your spending and feeling on top of things financially. A good budget allows you to keep track of all your regular payments such as rent, groceries and utilities, plus also put money aside for the less frequent expenses such as holidays, car registration and gifts. Ideally, the left-over funds can go into a savings account for investing and building wealth.

Am I really in a position to seek financial guidance?
The common misconception is that you should not seek financial advice until you’ve saved a significant amount of money to invest. However, a good advisor can offer valuable advice that will help you to develop strategies, such as budgeting, that will put you on the right track to be financially successful. Developing a financial strategy is not only prudent but provides one less thing to worry about in our busy lives!

If you would like to speak to the team at Montara Wealth about your financial concerns or developing a financial strategy, please click here.

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At Montara Wealth we work with clients who are at the very beginning of their financial journey, through to clients who are preparing for the later stages of their financial lives. Contact us today via the form below for a no obligation consulation or call 02 8330 3733 to talk to one of our advisers.

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