Money on my mind

By Bert Schreurs, Ruud Gerards and Riccardo Welters
Posted on November 10, 2021

First results suggest that financial worries are not exclusive to lower income households.

A substantial share of households in rich industrialised countries such as The Netherlands, Belgium and Australia have incomes too low to cover all basic needs, and regularly forego on needs such as heating their house or buying essential clothing. Undoubtedly, the current COVID19-crisis will have exacerbated the situation considerably. It is likely that these households have financial worries, or ‘money on their mind’. We study how these financial worries vary over time, by surveying households bi-weekly over a period of 4 to 6 months. On Monday the 20th of September the first group of participants from the Netherlands, Belgium and Australia started with their six-month bi-weekly participation in our study of the dynamics of financial worry. A second group started on 1 November on a four-month bi-weekly schedule.

Our first results confirm that a substantial share of respondents in our sample of Dutch, Belgian and Australian households experience high levels of financial worry since the start of 2021. 43% of the households in our sample experience higher than average levels of financial worry, 17% experience average levels of financial worry and 40% experienced below average levels of financial worry. Households that experience above average levels of financial worry answer ‘often’ or ‘always’ to questions such as ‘how often they felt worried about their financial situation’ and ‘how often they felt overwhelmed by their financial obligations.’

Who experiences financially worry

With our research we aim to understand how financial worry changes over time and how financial worry relates to personal and social circumstances.

First of all, we observe that higher levels of financial worry relate to lower perceived personal well-being. For instance, people who worry about their financial situation seem to also i) have a lower satisfaction with life, ii) experience more feelings of depression and iii) indicate less often that their financial position is better than that of close friends/contacts.

Second, our results also show that social support (from friends, family or colleagues) is related to lower levels of financial worry.

Third, it seems that a higher household income is related to lower levels of financial worry. Higher than average levels of financial worry are relatively more often observed for respondents with less than € 30.000,- gross yearly household income, compared to respondents with higher household incomes. However, even among households with higher income levels (up to € 100.000,-) there is still considerable variation in the level of financial worry. Thus, financial worries are not exclusive to lower income households.

What causes financial worry

A specific source of financial worry for almost one third of the respondents is the timing of important transactions on their bank account. For instance, the moment when periodic payments are deducted (e.g. payments for rent, loan or mortgage, health insurance or utilities) and the moment when periodic income is deposited (e.g. wage, benefits or government subsidies). Respondents who perceive this timing as a source of stress report above average levels of financial worry. However, almost all the respondents who indicate that this timing of periodic transactions on their bank account causes them stress also indicate that they would experience less stress if there was a better alignment between the moment at which they receive their periodic income and the moment at which they have to pay periodic expenses. This suggests that this source of stress could be alleviated if creditors would be willing to adjust the timing of the payment transaction upon request of people who experience financial worry. This way people who worry about their finances could align the timing of the periodic payments and deposits. In addition, financial institutions could also pro-actively play a role and engage with their household clients to look at the timing of their periodic payments and deposits.

The research is still ongoing and we will be collecting new data every two weeks until mid-March 2022.

Bert Schreurs is a Professor of Human Resources Management at the Faculty of Social Sciences and Solvay Business School —Vrije Universiteit Brussel (VUB), Belgium.

Ruud Gerards is a Research Leader at the Research Centre for Education and the Labour Market (ROA)—Maastricht University, the Netherlands.

Riccardo Welters is an Associate Professor in economics at the College of Business, Law and Governance—James Cook University, Australia.

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