Financial wellbeing

My definition of Financial wellbeing is about feeling secure and in control – i.e. being healthy, happy & comfortable with your money.

It is about knowing that you or your family can pay the bills today, can deal with the unexpected, and are on track for a healthy financial future. In short, it is about being confident and feeling financially empowered. Let’s take the Covid-19 pandemic as an example. No one could have predicted the vast economic impact to the country it would have, but what it did reveal was that many people had no capacity to cope with the unexpected.

Financial wellbeing is good for everyone

As well as financial wellbeing, I believe there are five other components of wellbeing:

  1. Physical – Used to rank the highest; with poor health, anyone’s life can be severely constrained.
  2. Mental – Nowadays with so much more awareness and understanding of mental health, this issue probably ranks equally with the physical. Poor mental well-being can be debilitating over time if not addressed.
  3. Emotional – For me, this is different to the above as it is about having good relationships with yourself, loved ones, friends, family etc.
  4. Educational – Very essential during pre-Adulthood because it will influence your vocational journey and will continue to provide technical growth.
  5. Personal Growth – This is my favourite, an endless journey when the other five well-beings are optimally in sync. This, in my opinion, provides the most satisfaction and fulfilment in life.

Financial well-being, along with the 5 components mentioned above, is fundamental and attention is needed for all.

Every individual needs to optimise and balance each component in accordance with their individual Beliefs, Values and Attitudes.

Poor financial wellbeing

Poor financial wellbeing affects tens of millions of people today and has the potential to hold the UK back.

A recent survey found 11.5m people have less than £100 in savings to fall back on. 9m people often borrow to buy food or pay for bills. 22m people say they don’t know enough to plan for their retirement. And 5.3m children do not get a meaningful financial education (Money Advice Service, 2018).

Take control

You might be young now but having a better understanding of what you can do now, will help you in the future.

Some positive ways to use and manage your money
The enemies of financial wellbeing
  • Buy experiences not “stuff”
  • Understand your income vs outgoings with simple budgeting techniques
  • Take control and educate yourself to become a savvy spender.
  • Savings & Investments
  • create realistic options
  • Have a clear path & plan to objectives.
  • Not having control over your finances (uncertainty is a big enemy)
  • Lack of education & understanding
  • Materialism (wanting to accrue ‘stuff’)
  • Comparing yourself with others.
  • Advertising which implies you are not good enough unless you buy product
  • Measuring money as success.

For me, the key to financial wellbeing is to have a plan – not one that focuses just on making you wealthier but making you happier.

A blog post by Yogesh Nakarja

Yogesh is a professional Financial Adviser at Lighthouse Financial Advice Ltd. and has conducted several financial education workshops in schools in and around London.

For more on the above and other money subjects, check out the Your Money Matters here.