Financial distress and your mental wellbeing

RSM - providing person insolvency, bankruptcy and corporate insolvency solutions
RSM - providing person insolvency, bankruptcy and corporate insolvency solutions

“What do you do for a living?’ It’s a common conversation starter in Australian culture. If you’re in financial distress, potentially facing bankruptcy or insolvency, this can be a dreaded question. A question that’s potentially very difficult to answer.

The impacts of financial distress are far-reaching and go well beyond a balance sheet.


Financial wellbeing and mental health are closely linked

Laura Higgins, Senior Executive Leader, Financial Capability at Australian Securities and Investments Commission (ASIC) and Head of moneysmart.gov.au, recently explained in a Beyond Blue interview that for most people, financial wellbeing and mental health are closely linked.

“Being conscious of how financial health and mental wellbeing are connected, openly acknowledging that, and seeking help early on if you’re facing financial difficulties is really important,” Laura said.


Financial distress is personal

Andrew Bowcher, RSM Restructuring and Recovery Partner based in Wagga Wagga NSW, has seen first-hand the mental health and family relationship impacts financial difficulties can cause.

“There is no doubt that being in financial distress is mentally tough, especially if the cause of the financial difficulties stems from very personal life events.

It’s not just about the dollars and cents in these cases; it’s about relationships, identity, pride and concerns about what the future looks like for them and the people they love.” Andrew said.

Some family-related or personal circumstances that can contribute to financial difficulties include:Andrew Bowcher, RSM Restructuring and Recovery Partner based in Wagga Wagga NSW, has seen first-hand the mental health and family relationship impacts financial difficulties can cause.

  • Divorce
  • Family succession planning disputes
  • Illness  or injury of a family member or business partner
  • Misaligned business priorities - one business or life partner ‘wanting out’ of the business
  • Legal actions or claims against a business.

How much do Aussies owe?

Canstar figures show that the average Aussie owes $3,841 on their credit card, has personal debt of $17,700 (excluding credit cards and property loans), and has a mortgage of $565,881. This may be higher or lower depending on where you live.

Life doesn’t always go to plan, and debt levels can quickly spiral out of control.


Address financial problems - aim to reduce the mental health impact

According to Head to Health, an Australian Government Department of Health initiative, “addressing financial problems early on can reduce their impact on mental health.”

Some signs that financial stress may be affecting your mental wellbeing could include:

  • Arguing with the people closest to you about money
  • Having trouble sleepingThere is no doubt that being in financial distress is mentally tough
  • Feeling angry or fearful
  • Mood swings
  • Tiredness
  • Loss of appetite
  • Withdrawing from others.

Source: Head to Health 

“I've been so upset, and really, really angry over the past year or so because so much of my money has gone.” *Michelle (name has been changed) told Beyond Blue.


Family matters

Andrew Bowcher is currently working on five restructuring or insolvency matters - all of which involve multiple stakeholders.

“I’m engaged by a family right now as part of a family succession planning dispute where assets need to be distributed between siblings. Emotions can run high at times. I have learnt that there is plenty of scope for the one situation to have many varying perspectives from family members.

My role is to unemotively explain the available financial options. In these types of scenarios, independence, neutrality, empathy and expertise is critical. I genuinely enjoy helping people get the best outcome possible, in what’s often a very difficult situation,” Andrew said.


Let’s continue to break the stigma around bankruptcy and mental health

“One of the positive trends I am starting to see is that people are being more open about their mental health. I commonly hear phrases from clients like: ‘I’m seeing someone about how I’m feeling - I know I need help because I’m not sleeping properly,” Andrew Bowcher said.

“I think we need to keep breaking down any stigma associated with mental health and financial distress. There is help available if people put their hand up and gain the support they need.

People often seem very relieved when they do reach out for help and start exploring their financial options - as they don’t need to carry the burden of financial distress alone any longer,” Andrew said.

The team at Lifeline understands the impact financial hardship can have. “Financial issues can spiral out of control quickly. Constant worry about juggling bills or being chased by creditors can take its toll on a person, their family and friends.​”

If you need to speak to someone about your mental health, we recommend you reach out to your GP for a referral or call Beyond Blue on 1300 22 4636 or Lifeline on 13 11 14.


Explore your financial options

Free, confidential initial phone calls are available with experienced RSM Restructuring and Recovering team members. We’re here to help.              Call 1300 263 816  or visit the RSM Options Hub