It's probably not news to you that the state of your finances can have an impact on your mental health.
According to the Money and Mental Health Policy Institute, around half of adults in the UK who are in problem debt also have some form of mental health issue, while people who are in significant levels of debt are more than twice as likely to develop major depression as those with no debt worries at all.
As such, developing a state of financial wellbeing is really important, not only for the health of your finances but for your mental health too.
What is financial wellbeing?
While definitions vary, at its core financial wellbeing is simply having a sense of security over your finances, the feeling that you are in control of your money and have some element of choice over how and where you spend it.
It’s important to recognise that this isn’t simply about the size of your salary. A study by SalaryFinance found that the two income groups that are most likely to have money worries were those with salaries of £10,000-£15,000 but also those earning above £100,000 a year.
In other words, just because you have an above average salary, it doesn’t mean that you necessarily feel in control of your money, nor are you immune to fretting about your financial future.
Why financial wellbeing matters
If you have money concerns, this can have a knock on effect on all sorts of areas of your life.
This may start with sleepless nights, but can easy develop into full blown anxiety or panic attacks, or even depression.
And as it may be difficult to take your mind off of those financial worries, this can then feed through into becoming distracted at work, as well as taking a toll on your relationships with your family and friends.
How to improve your own financial wellbeing
Taking control of your cash may sound like a simple idea, but in practice in can be a little more complex. Nonetheless, there are a number of straightforward steps you can take to put yourself in a better position to eliminate those sleepless nights fretting about money.
Start with a budget
It doesn’t matter whether your annual income is £15,000 or £150,000, if you want to feel some sense of control over your money, then you need to have a good idea of exactly how much is coming in, and how much is going out.
Go through your bank and credit card accounts to see how much of your money is going on essential outgoings. From here you can get a good idea of how much disposable money you have to play with each month, as well as how you are currently spending that money.
Get those essentials under control
There is some spending that you simply can’t avoid - everyone needs to pay for their energy, for example. But it’s well worth shopping around to see if you can reduce the amount you have to shell out on those essentials, whether that’s switching your broadband supplier or changing your supermarket so that you spend less on food each month.
Build a safety net
Life can be unpredictable, and if it decides to throw you a curveball, this can knock your finances off course. All it takes is for the car to suddenly pack up, or for the boiler to go, and you can find yourself once again in a panic over how to find the money you need.
That’s why building up a savings safety net is so important. If you have that security behind you, then those sudden expenses are less likely to be quite so damaging to both your state of mind and your finances.
You’ll want to keep that money in an account you can dip into whenever necessary, so an easy access account is a good start. You won’t earn much in the way of interest, but every penny will help.
Forget about your friends
If you’ve ever caught yourself feeling envious at the career prospects and salary of your friends and family, you certainly aren’t alone. Many of us do it.
However, from a financial wellbeing perspective, it can be a really unhelpful habit. Your focus needs to be on your own money situation, and whether you are in a position to dictate where you spend some of your money each month, outside of the day-to-day essentials.
A larger wage does not necessarily bring with it a greater feeling of financial control, so try to avoid getting too caught up in a salary competition with your loved ones.
Can your employer help?
Stressing about your finances doesn’t just impact your homelife, it can have a knock on effect on your work too. This could mean having to take time off, or your productivity while at work dropping.
As a result, some employers are looking to find ways they can support their staff to improve their financial wellbeing.
These can take all sorts of different forms, from providing basic financial education on pensions and savings, to access to financial advisers and even low-cost loans. So it’s well worth having a chat with your employer to see what assistance they can provide, or even to highlight specific areas where you think they may be able to help.