Financial wellbeing: what you need to know

  • Leanne Lancaster
  • 17 January 2022
  • 6 mins reading time

"Are you OK?"

When most people answer this question, they tend to reflect on how they're feeling from a physical perspective. Recently there has been an increased focus on raising awareness of our mental health which is starting to have a positive effect with people now taking this into consideration.

The majority of the time, regardless of how we're feeling, we'll answer with the words "I'm fine". Whether this is through politeness, embarrassment, or habit, sadly, this isn't always the case.

As well as physical and mental issues, another factor which has a huge influence on how we're feeling is our financial wellness. Although rarely talked about, our recent Financial Wellbeing research highlighted that 85% of UK adults are impacted, either physically or mentally, by their money worries.

What is financial wellbeing?

We believe financial wellbeing isn’t about having the most money, it’s about having enough money to enjoy the things in life that make you happy. It’s also about being in control, having financial freedom and prioritising what’s important to you.

The Money and Pensions Service defines it as:

“Financial wellbeing is about feeling secure and in control of your finances, both now and in the future. It’s knowing that you can pay the bills today, can deal with the unexpected, and are on track for a healthy financial future.”

In January, we surveyed 1,000 UK adults to ask them about their financial wellbeing and how they plan to prioritise it in 2022.

Our findings revealed that nearly half (49%) of UK consumers are concerned about their finances, with 57% saying the worry affects them mentally, with 73% stating that sorting out their finances is a priority for this year.

The good news is that those surveyed seem to understand the value of a financial plan with more than half (54%) stating that it is likely that they will rely on a plan to manage their finances. And with 49% claiming that they’re likely to seek help from a financial adviser, it seems that 2022 really could be the year that UK consumers take control of their finances.

Tips for improving your financial wellbeing

An improvement in financial wellbeing can be activated by a positive change in behaviour. We recommend the following five steps to help you improve your financial wellbeing in 2022 and beyond.

Remember that it pays to talk

15% of people surveyed said that they wouldn’t know where to start when it came to getting a financial plan. This isn’t surprising. As a nation, we don’t always like talking about money. Our finances are often seen as complex, personal and something that shouldn’t be shared - particularly when we’re facing financial hardship.

Money is often viewed as one of the last taboos, however we can all have a part to play in normalising the conversation about our finances. The research found that 25% view financial advisers as helpful and this is exactly what they are there for. Whether you have money that you’d like to invest, or you want reassurance that you’re saving enough to retire comfortably, a financial adviser could support you throughout your financial journey.

Plan for the future

Our research found that 13% of UK consumers are unsure of why they should look to create a financial plan. Amongst the benefits, a plan could help reduce the stress of managing finances and could offer valuable peace of mind. The first step of a financial plan is to detail expenses and savings, and with nearly a fifth of those surveyed (18%) telling us that their main new year’s resolution when it comes to their finances is to become debt free, closely followed by 16% wanting to reduce their outgoings, a plan could be a great start to achieving these goals in 2022.

Seek guidance from a professional

Financial advice can go a long way to provide peace of mind that you are addressing the needs of you and your family. Good financial planning is not just about solving problems. It is about working together with your adviser to help identify your objectives and life goals and then creating a plan for your finances to help you achieve these.

However, our research discovered that 45% of people believe that they don’t need help with their finances. For some people, this statement may be true. But for many others, the expertise of a financial adviser could help you make the most of your savings and investments. Finances can often be complicated and there’s lots to consider when it comes to potentially achieving your long-term goals. Markets can be volatile, and it can be overwhelming when considering the risks versus the rewards of investments. A good financial adviser can help to steer you in the right direction and could be an investment which is potentially paid back many times over.

Know the value of advice

Financial advice isn’t just for the wealthy, yet 13% of UK consumers assume that financial advice is too expensive. This isn’t always the case though. Many financial advisers offer a free initial consultation, which can involve identifying what your financial needs are and understanding where you need help.

For example, at Schroders Personal Wealth, our advisers prepare and present a financial plan before you’re required to make a financial commitment. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.

Think big picture

Financial wellness cannot be looked at in isolation. Having a good level of financial wellbeing and feeling confident about your finances underpins all the other elements - they go hand in hand.

We believe understanding what’s important to you and your current situation are the cornerstones for creating a financial plan. Identifying the things that will bring you happiness and putting a plan in place which aims to help you achieve them should be the end goal.

How we could help

We firmly believe in the value of getting professional financial advice. Financial advisers can help you build your financial future by pinpointing areas that might need improvement – and set you an actionable plan which aims to get you there.

Having your finances organised and being in a comfortable position could help you feel more in control of your money, giving you one less thing to worry about. In turbulent times like these, advisers can also guide you through life’s financial changes and challenges – whether they be external factors such as COVID-19, stock market volatility or inflation, or personal, such as job changes or the cost of having children for example.

By identifying and keeping in mind what makes you happy, you could be on the path to achieving better long-term financial wellbeing.

Important information

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.

Fees and charges apply at Schroders Personal Wealth.

In preparing this article we may have used third party sources which we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.

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We'll begin with a free, no obligation conversation to understand if our service is right for you. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.

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