Last year, research from mobile bank N26 found that around 9.5 million adults in the UK have suffered from mental health issues as a result of financial anxiety.
While young people were among the most affected, financial worries were also prevalent across all age groups. A quarter of those aged 45 to 54 said they worry ‘constantly’ about their finances, with almost a third of these people saying that their worries have affected their mental health.
A 2019 Salary Finance study, published in the Financial Times, found that worrying about money was the biggest source of stress for British workers and that the average person spent at least three hours a week dealing with personal financial issues and took one sick day per year to deal with pressing financial concerns.
And, interestingly, financial anxiety affects people irrespective of wealth. Those earning over £100,000 reported the same level of concern about their personal finances as those earning less than £10,000.
With financial wellbeing closely linked to mental health, it follows that looking after your money can help your overall wellbeing. Here are some tips.
5 ways you can improve your financial wellbeing and mental health
1. Make sure you have a rainy-day fund
Having an emergency fund in place can give you real peace of mind that you have some money available in the event of a sudden change in your circumstances. For example, if you unexpectedly lost your job, do you have three months’ worth of salary saved in an easy-access account that you can fall back on?
Having a safety net in place can also benefit you if you need a new boiler, your car breaks down, or your roof needs fixing.
Having this buffer in place can help you to sleep easy at night, safe in the knowledge that there’s money there if you need it.
Julia Round, a debt adviser at PayPlan, says that ‘how do I set a budget?’ is one of the questions she is most frequently asked. “How to save and budget” also topped a recent survey of financial topics that British adults said they wished they had been taught about in school.
It may sound very basic but reviewing and setting a budget can be one of the most important steps you take to reduce money anxiety. Make time to go through your outgoings and cancel any direct debits or subscriptions that you don’t need, and make sure you shop around for insurances and utilities when the time comes.
Reviewing your budget from time to time can help you to stay in control of your money, and this will reduce the worry.
3. Think about where your income is coming from
Many people rely on one source of income, most often a full-time job or income from the business they run. If this income ends for whatever reason, it can create huge stress as all your income could essentially disappear overnight.
Is there any scope for you to develop an additional income stream on the side? This could be:
- Using your skills on a freelance basis, perhaps in the evenings or weekends
- Consultancy work
- Turning a hobby into a business
- Online tutoring or mentoring.
Diversification in terms of where your pension income comes from can also be wise for similar reasons. For example, during periods of stock market volatility, it may be better to generate income from cash reserves than from selling your investments. Having this choice available can provide reassurance.
4. Make sure you have the right protection in place
If you or your spouse could no longer work due to serious injury or ill health, or one of you passed away, what would happen to your household finances?
Putting the right protection in place, such as Life Insurance, Income Protection and Critical Illness cover, is a sensible way of reducing money worries. You can sleep at night knowing that there will be financial support available if the worst were to happen.
If your business is reliant on key individuals, then it can also pay to make sure there is cover in place to protect them.
5. Work with a financial planner
Financial planners do much more than simply organise your pension or investments. As well as making sure you have the right protection in place, they can help you to create a long-term saving and investing strategy that takes care of your current and future needs.
Financial planners have a huge depth of knowledge and experience, not to mention qualifications that mean you can gain real value from accessing their expertise. Financial advice can take the hassle and worry away and replace it with peace of mind and a feeling of control.
Get in touch
If you’d like to find out more about how we can help you take control of your finances, and reduce your financial stress, please get in touch. Email firstname.lastname@example.org or call us on 01454 416653.