Imagine you’re wellbeing as a Trivial Pursuit piece filled with six little wedges. Every wedge (or maybe you prefer cheese, but that debate warrants a whole other blog) represents a part of your overall health and wellbeing. These six ‘wedges of wellness’ are – emotional, physical, social, intellectual, spiritual and financial. Each one helping you achieve a balanced, healthy lifestyle that can support you make good life choices. When one falls off kilter, it can make the rest of you feel a bit wobbly and out of control. We aren’t spiritual gurus or able to fix your social life, but we can help with tips and steps to help you build a healthy relationship with money.
What is financial wellbeing?
It’s not simply about building up your bank balance, its about increasing your confidence around managing money so you can make informed and knowledgeable decisions, understand how your financial health can impact the other wedges in your wellness piece, and help you plan so you can achieve the goals you’ve set.
- Being confident in financial decision-making
- Feeling able to manage day-to-day finances, without worry
- Preparing yourself for unexpected financial events (they will happen!)
- Becoming forward-thinking about your own financial planning.
Why is financial wellbeing important?
If you feel in control of your finances, you’ll feel more stable and less stressed. That’s the same for someone who has debts to pay off but understand the amount they need to pay back in each month and how long it will take, as for someone who is saving for a house deposit and knows how much to put aside each month. It isn’t about how much money you have, it’s about knowing how to manage the money you have.
If you’re living pay day to pay day, a well-structured budget can make you better able to effectively manage everyday expenses, give you a better view of how to save for unplanned costs and help with planning for the future.
There’s also a strong link between financial health and overall mental health. It can lead to increased anxiety, sleep problems and even depression. Taking control of your finances, whether its paying off debt or regularly saving, can boost your sense of wellbeing and allow you to focus on the other important wellness wedges, such as your social or intellectual goals.
Your financial wellbeing checklist
You might regularly meet your steps goal, mediate and read to take care of your physical, spiritual and intellectual wellness wedges. It takes a little effort, but you feel the benefits over the long term. The same goes for your financial wellness. You need to invest a little time.
If you are successfully managing their finances in order to maintain a comfortable life, you most likely have good financial health. Keeping up with your rent or mortgage and other bills and debts, having savings set aside for emergencies and planning towards longer term goals such as retirement are all signs of financial health. For most people, financial wellness is long term process, with dips and growth along the way.
To help get you started, here’s a checklist of areas which can help you improve your own financial health:
- Know your credit score
It’s recommended to check your credit score at least once per year. By having access to your credit report you can see where you might be able to improve and checking that there are no errors in your personal information. For example, did you know that when you register to vote, your electoral details are recorded on your report, and this improves your score? Having a good credit score will affect lending decisions for things such as taking out a loan, applying for a new credit card and renting or your mortgage decisions. - Keep a budget
Understanding money is coming in and going out of your account each month is vital for financial wellbeing. By keeping a household budget, you can control spending, so you are able to keep up with debts and bills as well as work towards saving regularly if you’re not already. You can find out more about ways to budget here. - Start an emergency fund
Emergency savings should usually cover around three to six months’ salary – basically to keep your finances afloat if for a short period or to pay for unexpected costs like car or house repairs or job loss. You can find out more about ways to build up savings here. - Save for retirement
Whichever side of the fence you sit on, preparation is key when it comes to getting the most out of your retirement. But many aren’t sure if they’re financially prepared for a salary-free lifestyle. If you’re worried about your income following retirement, find out more about pension or savings and reasons to invest in your retirement savings. For individual pensions advice, it’s best to speak with a professional financial advisor. Visit unbiased for a list of regulated advisers. - Consider financial protection
If you have an emergency fund, this will help with covering you for short periods of time where you have unexpected debts or are maybe losing a salary for a couple of months. Financial protection such as life insurance and critical illness cover will protect you in events that are already a stressful and upsetting time such as death and illness. Most people don’t properly consider the financial impact of these, but they can be detrimental to families. You can get insurance advice to match your needs from a professional at unbiased.
Take care of your finances with Hodge
At Hodge, we understand that feeling confident in managing your finances can feel like a big undertaking. So, we’ve an abundance of resources on our website to help you become money confident. Just remember, financial wellbeing is a journey, and everyone’s financial circumstances are different. – the first step is adopting a positive mindset so you can take control and manage your money smarter.
Helpful links:
Quick and easy ways to save each month
Reasons to invest in your retirement savings now
An introduction to saving money
More about Hodge personal savings products
This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at unbiased.co.uk.