The term ‘wellbeing’ may conjure images of spa days, yoga, some leafy greens, and maybe a good long sleep. But we should be adding something else to this list: a review of our personal finances.
Nathalie Spencer writes for Female First
True, the idea of peering into our accounts, facing up to our spending, and determining whether we are on track for a comfortable retirement is decidedly less glamorous than donning a fluffy robe for an afternoon in the sauna. But it is so important to do, because once we get a handle on our financial position and understand how we are making choices with our money, we can design our lives in ways that make it easier for us to improve our financial wellbeing.
Managing money well is hard to do, and for many of us, there is room for improvement. The statistics, according to the Financial Capability Strategy for the UK, are dire. For example, four out of 10 in the UK don’t have an emergency buffer of £500. Nearly a quarter of us revolve our credit card debt or use short term credit like payday loans. Only 1 in 3 has a financial goal in mind and a plan to achieve it. Other research finds that more than 1 in 4 households (27%) in the UK have no savings - nothing at all.
So perhaps the most obvious reason for the growing interest in financial wellbeing is simply that so many of us are still struggling. A healthy financial wellbeing picture is one where someone can make it through payday to payday by meeting their bills and still having enough left to enjoy themselves, having an emergency buffer or other forms of resilience for when surprises happen, and preparing for the long-term, for example for retirement.
The figures above don’t paint that picture.
But it doesn’t end there, because money troubles affect more than our credit score (as if that wasn’t enough). Low financial wellbeing is related to other areas of our life as well, including our physical and emotional health. Volatility in income or expenses can influence whether people visit the doctor, in case they can’t afford the medical bills.
Many people are stressed about their finances. A survey by the American Psychological Association found that money was a significant cause of stress for 64% of respondents, and this rises for parents. The NHS even has a page devoted to how to cope with financial worry.
Given the wide reach of financial wellbeing, beyond the wallet and into physical and emotional domains, it is clear that we should be focusing on it. Yet many may find it a struggle to even start looking into their money situation – after all, it is not unusual to be reluctant to learn more about information that has the potential to be psychologically distressing. No one likes to get bad news. But by starting to understand where your money is going and how to use it better, you can begin to make positive changes to your financial life.
Wellness is a growing trend. A holistic vision of wellness should build on physical and emotional aspects of wellbeing by including financial wellbeing in the mix. Facing up to our finances and understanding our money decisions are good first steps. And, don’t worry, it can be in addition to – not replacing – a visit to the spa.
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