The importance of financial wellbeing and how to improve it
Financial wellbeing is about a sense of security and feeling as though you are in control of your finances because you have enough money to meet your needs.
It’s incredibly important to our general mental health and ability to enjoy a happy and fulfilling life.
But according to the charity CABA around 11.5 million have less than £100 in emergency savings.
They also claim that more than 5.3 million children aren’t getting a meaningful financial education and 22 million adults say they can’t plan for the financial demands of retirement because they don’t know enough about it.
There are a number of ways we can improve our money habits to help improve your financial wellbeing:
- Plan your spending
Knowing your income, expenditure and disposable income once your day-to-day expenses are covered, will give you confidence in your decisions. Creating a budget helps you take control and decide where you need and want to spend. This will include essentials like rent or mortgage, utility bills and transport.
- Keep track of your spending
Monitoring your spending is important and you can use apps to help balance your bills. Being conscious of when and where you’re spending can help you keep it under control and help you spot areas where you could cut back. Here are suggestions of a few apps to choose from.
- Be careful with your money
No matter how big or small your budget is, not overspending is a really important habit to get into. This is about knowing your limits and using your money wisely so you don’t end up feeling guilty. So only spend on essentials and things you get pleasure from – whether it’s a new outfit or a family outing.
- Avoid borrowing for essential expenses
Credit is not necessarily a bad thing as long as it’s manageable and affordable. Take into consideration the APR of any loan, the monthly repayments, how long it will take to pay back and the total cost of credit before you commit.
- Save regularly
No matter how small, regular payments into a savings account is the first step to financial security. If your employer is a payroll partner with a local credit union then you could set aside money every time you get paid.
- Find the best deals
You can save plenty of money by shopping around. Aim to check your insurance and utility providers for the best deal every year. Online comparison sites make this incredibly easy
Coupons and cash back deals have never been easy thanks to online widgets
Local loyalty schemes and cards can help get you the best deal while still shopping local.
- Prepare for the unexpected
Most of us experience the shock of an unexpected bill which is why building up a financial buffer is important. It’s generally recommended an emergency fund be equivalent to about three months’ worth of living expenses. This would also help you cope if you lost your primary source of income, such as your job.
- Plan for the future
Whatever your plans for the future, the more money you build up, the more flexibility you’ll have to do what you want and meet the unexpected costs that life can throw our way.