FINANCIAL HEALTH

Five tips for improving your financial wellbeing

  • Leanne Lancaster, Personal Finance Writer
  • 19 January 2024
  • 5 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. But there is now an increased focus on raising awareness of our mental health.

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 rarely-talked-about factor that has a huge influence on how we’re feeling is our financial wellness. In this context, it’s sobering that research for our recent Money and Mind Report highlighted that 64 percent of respondents are concerned about their finances.

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 having financial freedom and prioritising what’s important to you.

The Money and Pensions Service defines it as follows:

‘Financial wellbeing is about feeling secure and in control. It’s about making the most of your money from day to day, dealing with the unexpected, and being on track for a healthy financial future. In short: financially resilient, confident and empowered.’

In 2023, we surveyed 1,000 UK adults aged 35 and above to find out how their financial wellbeing has changed since our earlier report.

Our research revealed that 87 percent of respondents who were concerned about their finances said their mental wellbeing is impacted by their financial situation. Moreover, 29 percent of total respondents said they are stressed and anxious about their finances while 46 percent of respondents said they think about their finances more than they used to.

5 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 2024 and beyond.

1. Remember that it pays to talk

Some 16 percent of people surveyed said 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. In fact 22 percent of respondents said they were worried about their savings and investments but don’t know what to do. 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.

2. Plan for the future

Our research found that 71 percent of respondents said they might consider putting a financial plan in place and nearly half of respondents (49 percent) said they are likely to make a financial plan. Among 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 22 percent worried about their savings and investments but unsure what to do, a plan could be a great start to achieving these goals in 2024.

3. Seek guidance from a professional

Financial advice can go a long way to help provide the 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.

It may come as a surprise that only 36 percent said it is a top priority to sort out their finances. But a financial adviser could help many others make the most of their 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 turbulent 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, although as with all investing this isn’t guaranteed.

4. Know the value of advice

Financial advice isn’t just for the wealthy. 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.

5. 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 that 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, yet only 5 percent of respondents have spoken with a financial adviser. Financial advisers can help you build your financial future by pinpointing areas that might need improvement, and they can set you an actionable plan that 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 a pandemic, stock market volatility or inflation, or personal factors, such as job changes or the cost of having children.

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

Sources:

Data comes from the Schroders Personal Wealth Money and Mind Report 2023.

Important information

This article is for information purposes only. It is not intended as advice.

Fees and charges apply at Schroders Personal Wealth.

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.

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.

The value of investments and the income from them can fall as well as rise and is not guaranteed and you may get back less than you invest.

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