In our latest guest blog, founder of MoneyMinded and Health@Work financial wellbeing affiliate Emma Waller deconstructs what financial wellbeing really means, and outlines a few key ways we can all improve our financial awareness.
Just like our physical and mental health, looking after our financial health is key to supporting our overall wellbeing. When we improve our financial confidence and knowledge, we’re better able to make informed financial decisions, and as such can better manage our money and develop a clear financial plan that works for both us and our family.
This is the core purpose of financial wellbeing – the state of having the awareness and resilience to understand and manage our money without causing unnecessary stress. Financial stress is one of the most common causes of mental ill-health today, with around two-thirds of British workers struggling with their mental health as a result of the cost of living crisis.
With more and more employers looking to improve their employees’ everyday wellbeing through supporting their financial wellbeing, it’s important to establish the basics of good financial practices.
6 ways to improve financial wellbeing
Understanding financial products and choosing realistic financial options can help us remain in control of our money today and in the future. In addition, understanding what’s both realistic and attainable to us in both the short and long term are vital in not only creating budgets for better real-time money management, but for helping our overall mental wellbeing. This is because when we set achievable goals, we’re able to more easily attain the end we want – giving our brains a sense of achievement and much-needed dopamine kick!
So, what do we need to consider for better financial wellbeing?
1. Set clear money goals
In other words, what do you want to achieve with your money in the short and long term? Is your goal to pay off debts, start investing, or make retirement plan? Once we have established, realistic goals, we are more likely to achieve them as we know what we’re working towards and can plan accordingly.
Firstly, establish your financial priorities and consider how these can be achieved. Factor in any barriers that might impact on your goals too; if you know what you might be up against, you’ll be better prepared.
2. Build financial resilience
Being able to withstand any future financial and economic shocks is vital to our financial wellbeing. It’s about being prepared, having a back-up plan and not simply reacting to a situation once we are struggling. Having emergency savings, paying down debt and being able to talk about money all form part of building our resilience around money.
3. Manage day to day finances
Being able to budget effectively and manage our spending is also fundamental to our financial wellbeing. These skills allow us to effectively manage our income and expenses as well as help us plan for our future wealth. Understanding our relationship with money as well as our attitudes and behaviours also give us a great insight into how well we are likely to succeed at this.
4. Understand financial choices
Whether that’s around borrowing and credit, savings and investments, or even understanding your pension statement, if we want to make confident, informed financial decisions then we need to understand what financial products and services can best support us.
5. Reframe your money mindset
How many times have you heard yourself say, “I’ll never be able to retire/own my own home/save!”
Some of us may use poor maths skills as a reason why we might not be good at managing our money. But if we can change the way we think about money, we can change the way we behave around it too. In reality, of course, this is easier said than done – particularly if you’ve not had a great relationship with money in the past. Once you take the opportunity to be kind to yourself and have more confidence when it comes to your money, managing money can be seen as an opportunity or challenge, rather than something innately negative.
6. Keep going – you’ve got this!
If you’ve spent 10 years in debt, it’s important to be realistic – you’re not going to solve all your money woes overnight. Financial wellbeing is a long-term practice with stability as the end goal, so try not to give up. We all deserve to show ourselves patience, with persistence and lots of practice too.
Achieving financial wellbeing is a lifelong, ongoing process as our priorities and personal circumstances change throughout our lives. If we can adapt and keep learning, our ability to manage our money can only improve.
Have you checked out our Money Matters – Financial Wellbeing Training course yet? Run by Martin Lewis co-author and financial education expert Emma Waller, this course is designed to offer an in-depth insight into the how’s, why’s, and what’s of everyday financial wellbeing for your employees. Find out more here.
