Liam Croke: Money worries that keep us awake at night

Last year, as part of research I was carrying out into financial stress and the impact it was having on employees and the companies they worked for, I commissioned a study to be undertaken by Amarach Consulting. Under my instruction I gave them, about 15 questions, and they in turn asked 1,001 people to answer them.

Last year, as part of research I was carrying out into financial stress and the impact it was having on employees and the companies they worked for, I commissioned a study to be undertaken by Amarach Consulting. Under my instruction I gave them, about 15 questions, and they in turn asked 1,001 people to answer them.

One of the questions I wanted to find the answer to was “Do you find it difficult to sleep at night because you are worried about your financial situation?”

Unsurprisingly the percentage who said yes was very high; in fact four out of 10 respondents said money worries came between them and their night’s sleep at least once a week.

What I discovered was corroborated by another survey carried out by Aviva in their Workplace & Health Index. Their medical director, Dr Ian Callanan, said that “many GPs are seeing patients presenting with TATT (tired all the time) and disrupted sleep patterns, often caused by stress and anxiety. Around one in three Irish people are sleep-deprived.”

And when you think back to when we were young children, what spooked us most at night was the dark and what we thought lived under our bed. Now as adults, fear about money is the thing that scares us most.

I began to wonder, from meeting and listening to people talking about their financial situation day in, day out, what were the most common financial fears people have. What is behind those worries and what can they do to conquer them? There are too many to list and I don’t have the room to refer to all of them in this column so I have narrowed the list down to three; the ones I find people refer to the most.

The first reason I have found that people find it difficult sleeping at night is because they think they will never get out of debt.

They have every reason to believe this to be true, particular when it comes to credit card debt. Some 76% of Irish people have a credit card and 70% (that’s 1.8 million) owe money on their card. Worryingly 31% of people (558,000) depend on using their card to make ends meet each month and 30% have fallen behind on payments.

Whether it is credit card debt, or any other debt, having a fear of it, can make you do one of two things.

The first is where you can bury your head in the sand and hope it magically goes away – it won’t by the way.

The second thing it might do could in fact be a good thing and you might be wondering why I am saying this. But I think when you have a fear of anything it can prompt you to confront it head on and will motivate you to come up with a plan to tackle it.

You see, if you continue to pay the minimum balance on your credit card bill, you are guaranteed to be in debt forever and a day and that is what the credit card company wants to happen, because they will make a fortune from you.

But if you can only pay the minimum amount and no more each month, what can you do?

Well, for starters, why don’t you ask them to lower your rate? Ask them to reduce down the rate to 0% for 12 months?

I did this for a client of mine and gave the credit card company the option of doing this for her or getting nothing from my client, who had other debt and would use the money she had previously paid to them to give instead to her local credit union whom she owed money to as well.

The result: two days later the rate was reduced to 0%. My client paid the amount she had previously been paying but this time all of it was going towards reducing her balance.

Twelve months later the balance on the amount she owed had reduced by over 30%.

Now, reason number two. Even though there seems to be a recovery taking place and unemployment is dropping, people are still worried because they think they might lose their job.

When you hear of big companies like Tesco announcing that they are commencing talks with staff about possible redundancies, you begin to ask how safe is your own company?

The key to protecting yourself from this ever happening is investing in yourself by, for example, learning a new skill, furthering your education by taking a night class etc. make yourself more marketable to the outside world but also make yourself so important to your existing employer that they couldn’t do without you.

And if, for whatever reason, you were let go, if you had savings in place that you could use until you were back in employment, how great would that be?

I assure you that if you had even just two to three months of your monthly outgoings in place that you can call upon, the impact of losing your job wouldn’t be as stressful as if you had none.

As for number three: a large number of people worry about losing their life savings.

This was much more prevalent a couple of years ago when we went through the banking and euro crisis one after the other where we wondered if our money was safe or by how much was it going to be devalued.

Anyway how do you overcome that fear that you will lose all of your savings?

I guess this will depend where your money is invested in the first place. If all of your money is invested in stocks and shares then absolutely you have reason to be worried. If everything you have is invested in the biggest casino in the world then you really are rolling the dice. Unfortunately, people are taking risks that they don’t know about, so you have got to be familiar with the accounts you have, what they are invested in, (that goes for your pension as well) who is advising you (very important) and pick accounts that are aligned with your risk profile and ones you are comfortable with.