There are two different ways to understand the concept of ‘financial hardship’:

The official definition which is used by government agencies to assess whether you are eligible for extra or emergency support or special eligibility consideration.
The unofficial, more generally understood way of viewing financial hardship when you are severely stressed by an ongoing inability to cover recurring household expenses.

Let’s deal with both of these definitions in turn

Centrelink and financial hardship

Centrelink consider you to be in severe financial hardship if all of the following apply to you:

  • your readily available funds such as bank accounts, shares and managed investments are less than the readily available funds limit
  • your other income is less than the applicable rate of pension or allowance
  • there’s nothing else you can reasonably do to improve your situation.

It’s important to remember to withhold moral judgement when it comes to hardship, which is not necessarily evidence of your inability to manage finances. It can occur for many reasons, including natural disasters, as we are seeing with the extraordinary floods in Queensland and NSW right now. It can also happen due to a relationship breakdown, illness, or the loss of a job.

It can also be related to difficulties managing credit or loans. Again, this may not be due to personal ‘fault’ – you may have been given a line of credit in excess of your ability to repay it, and this is questionable conduct at best, and against the law at worst.

For those already on Centrelink benefits, there is sometimes the mistaken belief that they are already considered to be in financial hardship.  This is not the case as you also need to meet the conditions outlined above.  But if you are deemed to be in hardship there are a few different forms of help. These include having a payment brought forward in the form of crisis or advance payments or emergency loans. There can also be state government help with rental bonds..

Additionally, you may be receiving a lower pension than is manageable, due to the asset threshold. For those affected in this way, Services Australia reviews your pension under the asset hardship provisions:

If your assets cannot be reasonably accessed, they may be defined as ‘unrealisable’. There are many different types of ‘unrealisable’ assets, which are best explained in a consultation with one of our Centrelink customer service team.

General financial hardship

In a broader context, financial hardship occurs when you cannot cover recurring household expenses and the struggle to do so is increasing your debt levels as well as causing stress or anxiety.

Such hardship may be because:

  • you are on a low fixed income
  • you have credit card debt that you cannot pay off and interest charges are spiralling out of control
  • your income is sufficient for your needs, but you habitually spend more than you earn .

Each of the above scenarios can lead to increased anxiety and/or relationship issues as you face the continuing struggle to live within your means.

The good news is that many people, with appropriate support, have risen above this debilitating situation.

Here’s an overview of some of the top level ways of tackling these financial difficulties. But the important caveat is that it is usually most effective when you partner with a suitably qualified professional who knows all the rules and options.

Situation Strategies Contacts
Low, fixed income which doesn’t cover outgoings Check you are receiving all your  entitlements Retirement Essentials entitlements consultations
Develop strategies to maximise your entitlements Book a consultation with a financial adviser
Contact a financial counsellor through the National Debt Helpline National debt helpline  1800 007 007 or live chat
Credit card debt Research and consider transferring debt to a credit offset card, whereby your interest is nil for an agreed period of time
Contact the card issuer and negotiate payment terms
Contact a financial counsellor through the National Debt helpline National debt helpline  1800 007 007 or live chat
Overspending Contact a financial adviser for assistance with retirement spending and planning Book a consultation with a financial adviser
Contact a financial counsellor if you feel this behaviour is addictive National debt helpline 1800 007 007 or live chat

We hope this list is helpful.  In addition it is always worth checking that you are receiving your Age Pension entitlements or at least the Commonwealth Seniors Health Card if you are instead eligible for that.  You can check them both below.

Check Your Entitlements