Almost weekly news of rising cost of owning or renting a home – amidst uncertainty over an interest rate rises – backs up that gut feeling that financial stress is everywhere.

When Financial Mindfulness interviewed a dozen people in Hyde Park Sydney while gathering footage for a marketing video, every person we spoke to believed financial stress was all around them.

The problem is “huge, huge” said one man, while others guessed 70 per cent of the population might be under financial stress. One woman said “everyone” was under financial stress, another commented they “didn’t know anyone” not under financial stress.

Most understood that financial stress could cause, or at least be associated with other problems in our lives, from depression to anger, insomnia, affecting our concentration and lower productivity at work, and things like social isolation. Marc Richardson, psychologist for Financial Mindfulness, says you can add “hits to your self-esteem”, relationship difficulties and a tendency to alleviate stress with drugs and alcohol to that list.

But there was little consensus among the people we spoke to – and a sense of helplessness – about how to help someone suffering from financial stress: answers ranged from providing financial advice to planning, to lending money through to just listening.

Mindfulness is emerging as part of the answer, which we freely acknowledge is our reason for being. But more on mindfulness later.

There is no doubt financial stress is a serious problem. But a key to finding solutions is understanding what it is – and what it is not.

Over two parts we look at six common myths about financial stress and we assess if they are true or false.

Belief 1 – Financial stress is just another type of stress, and stress is normal (so get over it)

Broadly speaking, stress is a normal physiological reaction to stimulus and is not always bad.

“Stress can be helpful and good when it motivates people to accomplish more,” says the American Institute of Stress, while pointing out stress is “a highly subjective phenomenon that it defies definition”.

Broadly, the word “stress” is interchangeable with “pressure” and more often we use the term financial stress when we really mean “distress” or “strain”.

Financial stress is a reaction to pressure around money, which can quickly turn to distress. This is surely partly because – thanks to consumerism – Western society tells us acquiring new stuff is a sign of success. Who would disagree that, in a nutshell, we want more than we really need?

Stress can be acute, recurring or chronic. Stress of any type can feel upsetting, but chronic stress has been shown to cause physical illness and psychological distress: the longer we are under money pressure the worse we feel.

Financial stress is literally stress about money, which we know is an emotional subject. Daniel Goleman, author of bestseller Emotional Intelligence wrote “if there’s any topic that arouses the amygdala – the brain’s center for hope and fear – it’s money”.

If you add in the guilt many people experience from a tendency to medicate stress by spending on excesses or luxuries – especially things you won’t or cannot talk about – it’s little surprise chronic financial stress takes hold in many people.

One expert on financial stress in the United States, DR J. Galen Buckwalter has identified a syndrome called “acute financial stress disorder”. Think of all the drivers: credit cards, loan and especially mortgage repayments, stress-relief spending and for people on lower incomes, basics like food, heating and rent.

If that last sentence makes it sound like financial hardship is the cause of financial stress, not always.

MOSTLY FALSE

Belief 2 – Financial stress is the same thing as hardship

The Australian Bureau of Statistics’ indicators for measuring financial stress, include being unable to pay various bills on time and being “unable to raise $2000 in a week for something important”. However, further reading shows its indicators are pointers to “households … experiencing economic hardship”.

But that is only part of the story of financial stress: it’s likely many more people are under financial distress. Much of the stress we suffer happens because we are convinced we need more, bigger and/or newer possessions. Or because of rising prices of, for example, housing.

Disturbing revelations about mortgage stress in recent days include the news that “42% of the average disposable income of a New South Wales household was swallowed up by monthly mortgage payments on a median-priced Sydney house”. The figure was 37.1 per cent for Melbourne. The ideal proportion, according to many financial advisors, is a maximum 30 per cent of gross income.

With a possible interest rate change and the unpredictability of unexpected expenses, spending so much money on a mortgage is a recipe for financial stress. That quickly turns to distress with major expenses, or a spending habit that is hard to control.

Rent is “unaffordable” or “severely unaffordable” for the majority of people living within an hour’s drive of Sydney city, according to the SGS Rental Affordability Index (and even worse if you live in the city). This means the cost of renting for most people in or near the city puts them under “housing stress”. The situation is not as severe in Melbourne, although most inner-city rental properties qualify as “unaffordable”.

But few homeowners or renters – at least not those in regular work – would qualify for government assistance on the basis of financial hardship, even if they are struggling to stay afloat.

FALSE

Belief 3 – Everyone is financially stressed

From one extreme to the other.

When we are talking about chronic and damaging financial stress – the kind defined by the Australian Bureau of Statistics’ financial stress indicators such as having trouble paying bills on time – then no, not everyone is financially stressed.

But it’s very common and the chances are it’s affecting someone in your family or someone you interact with regularly at work. The Australian Psychological Society’s Stress and Wellbeing Report in 2015 found 35 per cent of Australians report having “a significant level of distress in their lives”.

That report found “personal finances” (49%) were the single biggest cause of stress for Australians for the preceding five years, ahead of “family issues” (45%) and “personal health” (44%).

Those numbers suggest that someone around you is financially stressed, and probably a few people.

Interestingly, ANZ data showed women were more financially stressed than men but men were more impulsive with money.

The key question, that may never be definitively answered, is why some people suffer financial stress while others faced with similar challenges, do not.

The American Institute of Stress uses the analogy of people on a roller coaster to show the difficulty of predicting distress. Some people thrive on the shock and discomfort of the roller coaster experience while for others it’s pure torture.

“Many times we create our own stress because of faulty perceptions you can learn to correct,” The institute explains. The use of the word ‘perception’ indicates that the institute of stress believes this is at least partly a problem of thinking.

It elaborates: “all of our experimental and clinical research confirms that the sense of having little or no control is always distressful – and that’s what stress is all about.”

This suggests our personal relationship with the unexpected is a factor, that perhaps a sense of helplessness determines whether we turn a normal level of stress into distress.

So what do we do about financial stress?

PARTLY TRUE