What does financial wellbeing mean to you?
Updated: Nov 11, 2021
Do you suffer from money-related stress? If so, you’re not alone, whether or not you are a high earner.
Aegon has recently reported that all sorts of people worry about their wealth. Four in ten people in the UK have less than £100 left to spend at the end of the month. That’s not much of a cushion against unexpected bills, so it’s no surprise that three-quarters of that group suffer from money stress. A higher-income might alleviate that worry for some, but not everyone. More than half of average earners and one in three wealthy people still worry about money.
Understanding what gives us joy and purpose, and having short- and long-term plans to achieve those things is far more likely to make us feel good about our wealth than having a higher net worth.
How wonderful is that? We already felt that focusing on the good things in life is more important than just accumulating wealth, and now research has validated our conclusions.
‘People often look at me oddly when I tell them that Mike and I drew up our first ten-year plan while we were on our honeymoon,’ says Julia. ‘But we love it and update it frequently. We don’t stick to it religiously; it just provides us with a direction of travel and reminds us to focus on those things that are of greatest value to us. Our plan covers all elements of our life, including our finances. Knowing where we want to be and moving in that direction means that we have been able to pay off our mortgage early and own a woodland that has given us a huge amount of joy and satisfaction. Although we have a lot less money than many of our family and friends, we are confident in our planning and feel comfortable with our finances now and into the future.’
That’s what financial wellbeing is all about.
Aegon’s Financial Wellbeing Index has ten building blocks – five to do with money and five to do with mindset. On the money side, these are income, having savings for a rainy day, not having too much debt, having smart long-term savings, and having valuables like property that make us feel secure. These are balanced by the mindset building blocks of knowing what gives us joy, having a strong picture of our future self, making savvy social comparisons, having a long-term plan in place, and holding steady in a crisis.
So, what does this mean for you?
If you know what makes you happy and fulfilled, you can make a meaningful financial plan that you are more likely to stick to. If you answer the questions we pose in the Financial Planning Starts with Life Planning blog, you will be heading in the right direction.
It doesn’t matter how much money you have, life planning is always a good place to start when thinking about personal finance.
Do you have any tips for improving financial well-being? If so, please comment below.
If you would like to develop a financial plan for yourself or organize a workshop for your colleagues, contact me at email@example.com for an initial chat.