Mental health worsening as cost of living crisis bites

The number of Australians seeking financial counselling has surged by 30% as rising interest rates and high levels of inflation continue to strain their finances.

In the first five months, the National Debt Helpline recorded 13,000 more calls than during the same period in 2022 - a 30% increase nationwide. The uptick in calls from people in the ACT and Victoria was even higher, at close to double the number from last year.

Alice Russell, a financial counsellor based in Sydney with Wesley Mission, has witnessed this spike in demand herself. In fact, she says that the severity of the current cost of living situation is pushing a whole new cohort of people to seek support.

"We're definitely seeing an increase in the number of people, and some people coming in who are new to financial counseling are of an income level that, previously, were able to survive. They may not be on what's seen as a really low income, but as costs start to bite, the cohort is changing a bit."

Asked about the most common financial stressors for people at the moment, Russell says it's typically housing and utilities.

"Whether it be through mortgage repayments or through rent, the proportion of income that housing's taking up is rising. It really is a huge factor. They say someone enters housing stress when they pay more than 30% of their income towards it, but it's rare that I see anyone paying that low an amount.

"Running behind that is utility costs. With gas and electricity prices rising people are having trouble keeping up with their payments and they're starting to have to make really big sacrifices like avoiding having food that needs cooking, using appliances less - things like that."

Financial stress doesn't exist in a vacuum though. Dr Grant Blashki, lead clinical advisor at Beyond Blue, says that there's a strong relationship between financial hardship and mental health issues.

"More than a third [37%] of people who responded to our Beyond Blue survey said that cost of living had negatively impacted on their mental health in the last year - either quite a bit, or extremely.

"Beyond Blue and ASIC also did some research last year and the upshot of that is that people with financial stress are twice as likely to experience mental health issues.

"The way I think about it is when people are feeling financially secure, it's a little bit like riding your bike with the wind blowing behind you. You're not aware of it. But everything becomes a struggle when you're riding against the wind, and I think that's what it's like, because it affects everything - your choices, your relationships, your health, your housing, your work."

Bridging the financial and mental health support gap

While the link between financial wellbeing and mental health is well established, there can be a disconnect in ensuring that those who do need help are pointed in the right direction to get it.

"I think that the risk at the moment is that our mental health and our financial support systems don't always talk and aren't always aware of what each can offer. So we're very much advocating to raise awareness in both the financial and mental health sectors, about what the others do," says Blashki.

In order to assist those working in both sectors to be able to better direct people impacted by the cost of living crisis to mental health or financial support, Beyond Blue and Financial Counselling Australia have launched a new Services Guide for Financial and Mental Wellbeing.

"What I'd like to see is that if you go to a financial counselor or a financial institution that they're aware of the mental health services for people. They don't have to be a psychologist, but they can link people up and say, 'It's pretty tough at the moment, maybe go and give Beyond Blue a call'," explains Blashki.

"The flip side is true as well. If a GP or mental health professional can see that someone's main issue is financial strain, that they can link them up, for example, with the free National Debt Helpline."

The importance of these kind of interventions from service providers, or even from family, friends or colleagues, can't be understated according to the guide, as they can be the major turning point for someone to begin improving their mental or financial wellbeing.

Accessing support

So for the many Australians who are being impacted by cost of living pressures, what kind of support can organisations like Beyond Blue and financial counsellors like Alice Russell provide?

Beyond Blue offers a range of support services and resources related to mental health including mental health check-ins, the option to speak to a counsellor either online or over the phone, and dedicated services for people like small business owners.

"Beyond Blue has a great service called NewAccess for Small Businesses Owners which involves trained up coaches who come from small business, so they understand the sort of pressures that small business people are under and they've done some mental health training as well," Blashki says.

Meanwhile, financial counsellors offer a variety of free financial support such as helping people develop budgets, prioritise their debt, negotiate with creditors on their behalf and access any concessions, grants or no-interest loan schemes they may be entitled to.

While she knows that reaching out for support can be a difficult first step for some, Russell has seen firsthand the stress relief it can bring to clients.

"What I would say is the earlier that you reach out the better the result will be, and it will be a great relief to have someone supporting you. But no matter how far things have gone, I would just urge you to get support as soon as you can.

"I would say that there can sometimes be a bit of a wait for a financial counsellor, but the National Debt Helpline is a wonderful service that can provide immediate stress relief in that situation. So I would recommend using that if you're waiting to get into a financial counselor, because they'll be able to give you good advice about the basic things you can do in your situation."

Where to get help

Beyond Blue: To chat with a counsellor online or to make use of other resources visit the Beyond Blue website. Or speak to a counsellor over the phone on 1300 22 4636.

National Debt Helpline: Visit the website to live chat with a financial counsellor or to read through a range of helpful resources. Or call the National Debt Helpline on 1800 007 007.

ASIC's MoneySmart: Visit ASIC's financial counselling website for further financial counselling options or to find a financial counsellor near you.

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