Financial wellbeing and your mental health.

9 minutes
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Steps you can take to navigate your way back to better financial health.

  • Talk to someone and access help that is available.
  • Understand your money situation.
  • Look to make small and manageable changes.
  • Deal with your debt.
  • Revisit your budget.

Feeling financially confident and good mental health can be interconnected.  Changes in life circumstances including loss of your job, your business, or loved ones, can result in financial difficulties which can impact your mental health. The Australian Government’s healthdirect site states that, “money worries are one of the main sources of stress in Australia, and can lead to relationship problems, depression or anxiety.” 

We’ll outline the links between mental health problems and financial difficulties.  In challenging times, we understand how important it is to feel more in control and confident about the future.  So, we’ll share some simple, realistic steps that you can take to navigate to better financial health, and guidance on where to turn for help to get your finances back on track.

The links between financial wellbeing and mental health problems.

Financial difficulties can contribute to mental health problems, and vice versa, for example getting into debt because of loss of income can lead to anxiety. According to the Australian Psychological Society’s Stress and Wellbeing in Australia survey, the leading cause of stress in Australia was personal finances, with 49% of people surveyed stating this affected them. Whilst mental health and financial challenges are interrelated, even someone regularly paying off their debts may experience mental or emotional anxiety in relation to their finances.

Some signs that you may be experiencing financial stress that affects your mental wellbeing include having trouble sleeping; feeling tense, angry, or irritable; overspending when in a depressed state; or withdrawing from others. Improving your financial literacy and finding ways to address financial problems early can benefit your mental health.

Steps you can take to navigate your way back to better financial health.

Step 1: Talk to someone

Sometimes, if you’re experiencing money worries, there may be a temptation to try to manage on your own. Many of us may feel awkward about sharing money matters with others or even feel a sense of shame or embarrassment about our finances. However, bottling things up may only make financial stress worse.

It may help to know that there are skilled professionals, such as financial counsellors, available who can help people understand which debts are priorities, develop budgets and money plans and understand the pros and cons of different options to manage financial issues.

Financial challenges may also have an impact on your broader family and asking for your loved ones’ support can be crucial in helping to turn things around. Even if you have a tendency towards being self-sufficient, consider keeping your family up to date on your financial situation and see how they can help you save money.

Talking over your worries may help you make sense of what you’re facing and help you come up with solutions that you hadn’t thought of alone.

Step 2: Understand your money situation.

If you’re experiencing anxiety about your finances, it may help to understand your money situation. One way to do this is to record all your income and expenses in one place so you can see how much you're spending, and what you're spending it on. To help you, we’ve created a Spend Snapshot tool. Using this tool, can help give you a picture of your current situation as well as test out changes, like reducing your discretionary spending or getting started on saving for your 'emergency fund'.

Whether you use the Spend Snapshot tool or another tool, remember when considering your money situation to:

  • Include all sources of your income. In addition to your salary, include bonuses, benefits, support payments, or any interest you receive.
  • Keep track of all your spending. Seemingly small expenses, like buying a coffee each day can mount up over time, so keep track of all your spending. Understanding exactly how you spend your money is critical to budgeting and devising a plan to address your financial problems. It may be helpful to keep a Money Diary to identify regular small expenses mounting up that you may not be aware of.
  • List all your debts. Include past-due bills, Buy Now Pay Later debts, late fees, and list minimum payments due as well as any money you may owe to family or friends.

Step 3: Look to make small and manageable changes.

Spending money on things like multiple streaming subscriptions, a lunchtime sandwich, or a bottle of water can add up to a significant monthly expense. Could you cut down on any of this non-essential spending? Finding small ways to reduce your daily expenditure can really help to free up extra cash to pay off debts and help set you on a pathway to achieving your financial goals.

Are you ever tempted to splurge, or impulse spend? Have you ever seen something online that you just had to buy? Impulsive buying can wreck your budget and can cause more financial stress. Here are some tips that could help you to stop impulse buying:

  • Make a budget and stick to it. For help try our Budget Planner.
  • Defer spending and take a purchasing pause. With a fresh set of eyes, you might decide you don’t need to buy that heavily advertised ‘must-have’ item.
  • Be careful about joining too many email-marketing lists which are quite likely to bombard your inbox with sales. If you’ve already subscribed to email lists, do an audit of the emails you receive and try unsubscribing from the ones that don’t offer you any value.

Step 4: Deal with your debt.

When it comes to getting on top of debt, it’s important to get started sooner rather than later. The sooner you deal with your debts, the more you’ll feel in control. To help get you started, we have a Debt Prioritiser worksheet included in our Managing Money Guide.

Some tips to keep your debts in check:

  • If you’re struggling to make repayments, get ahead by speaking to your bank or the people you owe money to. They may be able to help you find a better way to manage the repayments.
  • Look at consolidating your debts. And if you’re able to, move them from higher interest rates to a lower rate. This could help make your repayments more manageable.
  • Set a realistic date for when you wish to be debt-free. Use this as a goal you can work towards, calculating when you can pay off what you owe.
  • If you do have savings, you may consider using them to help repay your debts. Compare the interest rate you pay on your loans with the interest you receive on your savings.

Step 5: Revisit your budget.

Budgeting is a proven, simple, and effective tool. A good budget helps you to take control of your money, save, organise debt repayments, and make the decisions that could change your finances for the better. Our Budget Planner takes you through a simple step-by-step process to help establish a budget that suits you, and supports you in achieving your financial goals.

Check the following items off your to-do list to plan effectively, budget and remain calm.

  • Record: Try recording when you receive your pay, when bills are due and when automatic payments are due. This can help you find times when your cashflow could be low during the month. Also consider writing down everything you spend in a day. Then try it for a week, and then for a month. It might be surprising how quickly little things add up. Using a Money Diary may help you identify how you’re using your money.
  • Review: Check your bills, and make sure your figures are accurate by ensuring your receipts and bills align with your budget. Of course, some things may fluctuate from month to month because of emergencies and other unpredictable events.
  • Reduce: Try to ensure that your expenses are less than your income, as going into debt is often a cause of stress. If your expenses are greater than your income, it may be time to rethink your expenses. We've put together a handy cost-cutting checklist which may help your planning and ease some of the strain on your finances.
  • Renegotiate: It’s worth looking at your large expenses and asking yourself – can I renegotiate them? For example, could you renegotiate a rent reduction with your landlord or ask your utility provider for a better deal?
  • Repay: Create a plan to pay off debt, so you know when your credit card balances, student loans, car or personal loan payments are going to be paid off. A key point to debt reduction is focusing on paying down your debt with the highest interest and fees first.
  • Revisit: Consider your budget on a regular basis so you feel more in control of your finances.

Help is available.

We hope the steps above help you navigate the impact financial stress may have. Support services are available:


This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

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Lali Wiratunga

Lali Wiratunga believes in encouraging positive financial behaviours to boost people’s financial confidence and help organisations to deliver social impact. In 2016, Lali was recognised for creating a positive impact through Pro Bono Australia’s Impact 25. Following a career as a corporate lawyer and management consultant in the UK, he's had 17 years experience in roles across financial services in Australia. He serves in the community as a Board Director of Plate it Forward, a food-based social enterprise that drives equal opportunity through creating opportunities to employ, train and educate individuals who might otherwise be prevented from entering the workforce.

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