3 eye-opening ways financial wellbeing can boost your mental health

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Your overall wellbeing is often broken down into three key areas: physical, mental, and financial.

  • Physical wellbeing is your ability to carry out physical tasks and to stay fit and healthy.
  • Mental wellbeing reflects your happiness, and ability to deal with stresses in life.
  • Financial wellbeing is about having a good relationship with your money, feeling financially secure and in control, and moving towards your goals.

You may look after your physical and mental health through exercise and activities like therapy and meditation. However, many people don’t take their financial wellbeing as seriously.

Yet, with FTAdviser reporting that almost half of UK adults say their mental and physical health has suffered as a result of financial strain, the evidence suggests they should[1].

Mental Health Awareness Week starts on 13 May, so what better time to learn three important ways your financial wellbeing can improve your mental health?

1. Understanding your financial mindset can improve your outlook

Having good mental wellbeing doesn’t mean you’re as happy as possible every single day. Life is full of ups and downs – it’s more important to focus on your long-term mental state, creating routines and habits that help you achieve positive wellbeing over many years.

Likewise, to be financially healthy, you don’t have to have a high income and lots of savings today. What’s more important is to have a long-term, achievable plan to get you to the financial position you want to be in 10, 20, or 30 years from now.

In their Financial Wellbeing Index, Aegon categorised 10,000 people into separate profiles according to their current wealth and attitude to money[2].

The 3% of people who fell into the “striver” category had low incomes and savings but a clear financial outlook. They didn’t feel the need to spend money on flashy things and had a plan to improve their long-term finances. So, though not wealthy now, they have good financial wellbeing and are happy.

Meanwhile, people with the same low level of wealth as people in the striver category but with a poor financial outlook were classed as having “challenging circumstances”. However, the only difference between this group and the strivers is their financial outlook, which unhelpfully limited their overall wellbeing.

No matter your current financial situation, building a long-term financial plan could help boost your outlook on life and improve your mental health.

Improving your financial outlook may seem like a challenge, but working with a financial planner can make the process more manageable and help you to improve your, and your family’s, wellbeing.

Read more: How professional financial advice could help boost your emotional wellbeing

2. Strong financial wellbeing could help you to weather life’s shocks

Though we hope they don’t, shocks in life can happen. Whether it be your car breaking down, losing your job, a health scare or a death in the family, there’ll be times in life when you lose a regular source of income or are faced with unexpected bills.

Without a safety net in place, the prospect of these events can be stressful, and when they do happen you may find yourself forced to take on debt to get through them.

The Money and Mental Health Policy Institute reports that more than 1.5 million people in England are experiencing both problem debt and mental health problems[3].

Preparing and holding an emergency fund could bolster your ability to get through these difficult times without incurring problem debt and reduce the damaging effects of financial stress.

However, many don’t have this financial safety net. In fact, Aegon found that 26% of people couldn’t manage to live off their cash savings for more than one month.

Financial planners normally recommend you build an emergency fund that can cover regular household costs for three to six months. If you’re not sure where to start, they can help you build this emergency fund, reducing your anxiety and stress should the worst happen.

3. Budgeting for your passions can make your life more enjoyable and meaningful

It’s a well-known mantra that money can’t buy happiness, but it can enable you to do the things you love.

If you think of money as being a tool that can unlock happiness rather than the source of happiness, you may find yourself more able to enjoy life now instead of constantly striving to achieve some perceived, wealth-related happiness in the future.

The Harvard Study of Adult Development – which has been continuously running since 1938 – has found that beyond a certain point of around $75,000 a year, a more prestigious job and more money will not grant you greater happiness[4].

To support this point, psychology professor at Pennsylvania’s Bryn Mawr College Marc Shulz told Reuters: “Rather than buying a bigger house or a nicer car, if you use your money to share experiences with others, that money will get you a better return on happiness”[5].

Sadly, Aegon reports that only 1 in 4 people know what makes their life enjoyable, and just 1 in 5 know what makes it meaningful.

If you love skiing, going to the theatre or supporting your local football club with your family and friends, you’re blessed to know what makes your life meaningful and fulfilling, and it’s important that you set money aside to pursue these passions.

At the same time, you shouldn’t do so at the expense of your future financial wellbeing – it’s essential to save for the future so you can live comfortably in retirement. Striving to find a balance between building a secure future while also living a fun and fulfilling present could give you sustainable wellbeing for many years.

Get in touch

At Aspira, we can help you to do the things that bring you joy now, while also building long-term wealth for your future. We’ll look at every facet of your financial life and help you to achieve both current and future financial wellbeing.

Email info@aspirafp.co.uk or call us on 0800 048 0150 to find out more.

Risk warnings

The information contained in this article is based on the opinion of Aspira and does not constitute financial advice or a recommendation for any investment or retirement strategy.

[1] https://www.ftadviser.com/work-and-wellbeing/2024/02/26/financial-strain-causing-adults-to-suffer-with-mental-and-physical-health/

[2] https://aegon.theapsgroup.scot/Financial-wellbeing-2023/18/

[3] https://www.moneyandmentalhealth.org/money-and-mental-health-facts/

[4] https://www.adultdevelopmentstudy.org/

[5] https://www.reuters.com/markets/wealth/what-worlds-longest-happiness-study-says-about-money-2023-02-06

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