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Financial industry, legislators urged to acknowledge ‘severe impact’ of debt on mental health

A new report has highlighted the impacts debt has on Australian mental health, which have only been accelerated by the COVID-19 pandemic.

Local debt support charity Way Forward’s report uncovered a number of key findings, including that those with savings of $1,000 and a manageable plan experience lower levels of stress and that 76 per cent of Australians worry about their finances regardless of their income.

Of those surveyed by Way Forward, 42 per cent said their finances impact their mental health daily.

The report also revealed that people earning below $35,000 and between $150,000 and $250,000 per year experienced the highest levels of stress about finances, which Way Forward noted indicates that a higher income does not reduce stress.

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However, 83 per cent to 90 per cent said they are confident they can meet their obligations and get on top of their finances when a repayment plan is in place.

“By investigating the lived experience of Way Forward clients, we found a high correlation between those experiencing financial hardship and poor mental health,” CEO David Berry said.

“Financial hardship is a significant burden for many Australians and things are getting rockier with the successive waves of lockdowns. It’s time for the industry and legislators to acknowledge the severe impact of debt on mental health so we can work towards a path forward.”

Mr Berry added that while financial institutions have supported people in the pandemic, temporary payments are not the only way to assist those who are struggling.

“By releasing this report, we want Australians struggling with debt to realise they are not alone,” he said.

“It’s natural to feel stress and anxiety over money in those circumstances. We want to remind you that help is out there and having a realistic repayment plan to end the cycle of debt can make all the difference in reducing anxiety that comes with debt stress.”

Financial industry, legislators urged to acknowledge ‘severe impact’ of debt on mental health
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Neil Griffiths

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.

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