It’s often said that money doesn’t make you happy. Whether or not that’s true is moot – but being under financial stress is definitely bad news.

The Scanlon Foundation Research Institute this month published a major report on the emotional toll of financial stress.

There are two major Australian polls on issues such as this – one by ANU and one by Scanlon (the Mapping Social Cohesion) study. The ANU poll found that 34% of the Australian population were finding it difficult to get by on their current income. 62% said they altered their spending on groceries and essential purposes to ease financial strain.

The MSC study looked at attitudes to financial stress and categorised respondents according to whether they described themselves as prosperous, living very comfortably, living reasonably comfortably, just getting along, struggling to pay bills or poor. 9% identified as struggling to pay bills in 2024 with a larger proportion of women identifying as struggling to pay bills compared with men (11% against 7%).

15% of those renting identified as struggling to pay bills while 7% of renters identified as poor. 8% of mortgage holders identified as struggling to pay bills, 16% of single parents said they struggled to pay bills while only 1% of mortgage holders identified as poor. Getting on the home ownership trip is a big advantage particularly- although Scanlon doesn’t say so – if you can get help from the bank of Mum and Dad and parents who have benefitted from negatively geared property investments.

The MSC research said: “there is a clear pattern of prioritisation, especially among those who describe themselves as poor. 52% reported that they often went without healthcare, 34% reported that they often went without food, and 24% reported they were often late on housing payments.”

They find that access to safe, affordable housing is an important part of solving the problem but has multi-faceted impacts such as driving wealth inequality and major expenses for those who are not outright owners.

Indeed, a large proportion of wealth inequality is a result of unequal distribution of housing. The Australian Council of Social Services and UNSW found in 2024 that average wealth from 2003 to 2022 grew by 74% however 45% of this went to the wealthiest 10% of households.

According to the Australian Institute of Health and Welfare 21% of low income households in the rental market were facing financial stress. Financial hardship also, inevitably, has a heavy impact on emotional tolls with knock on effects such as financial pressure from out of pocket health expenditure in Australia for medication and health insurance and gaps in the healthcare system. We are not yet the US but we may be going that way.

Financial stress is also associated with poorer mental health. While only 37% of those struggling to pay bills say they are unhappy there is still a heavy emotional toll with people feeling socially isolated and 51% of them say they feel they are very unhappy.

Those who are poor are more often feeling they lack companionship and often feel isolated from others. Needless to say, this is a cause of the strong correlation between financial strain and loneliness. Significantly loneliness is influenced by factors beyond the frequency of socialising, and rather represents an association between an individual’s social needs and what their social worlds can provide.

Active community engagement and a strong sense of belonging in their neighbourhood also have a moderating impact on the emotional toll of financial stress.

Australia, for a long time, was relatively egalitarian society. Australian politicians have for decades practised political tactics which are divisive and denying of the realities of what we were and who we are.

Admittedly there has always been, distrust of migrants and divisions over religion. That egalitarian culture did not just gradually disappear. It was a direct product of a series of policy changes – started by John Howard and continued by Labor- which made housing unaffordable for many, created a divisive class ridden education system which favoured rich private schools; demonising refugees; and failed to address our great silence on the critical issue of how we embrace our First Nations and recognise their rights as the inheritors of 65,000 years of history.

This is probably why the Scanlon report needs to suggest that social cohesion is not just about a one-to-one reflection of financial circumstances – an obsession of our political class and lobbyists – but that emotional and practical support through friendships and social connection can ease the burden of financial hardship on personal wellbeing and happiness. To put it simply the reports says – social cohesion can mitigate the impacts of financial hardship.

…and many other problems as well.