Could you improve your financial wellbeing using these highly effective methods?

You may be surprised to learn that one in three of the UK’s top earners worry about money, according to Aegon’s Financial Wellbeing Index.

The pension and protection provider’s index – which not only measures people’s financial security, but also their attitude towards it and levels of happiness – has provided some interesting data. It shows that, in addition to top earners, 55% of average earners also worry about their finances, leaving researchers to conclude that to be stress-free and happy you need to develop two “building blocks”.

These are:

  • Money building blocks for financial security
  • Mindset building blocks to provide a sense of enjoyment and wellbeing in life.

Read on to discover some of Aegon’s main findings and more about the building blocks, as well as how a financial planner could help you achieve them and bring a greater sense of wellbeing.

Earning more income doesn’t make your money worries go away

The fact so many middle- and high-income earners still feel stressed about money led researchers to conclude that larger mortgages and higher lifestyle expenditure may be putting people under pressure.

Indeed, if you work long hours to earn a higher income, researchers went on to say, you may find you’re too exhausted to actually enjoy the possessions you can afford to buy.

Put another way, the index concludes that if you work too hard you may not get the satisfaction you thought doing so would bring.

Financial wellbeing is about focusing on your future happiness, not having “more”

To achieve financial wellbeing, the study suggests that, instead of striving for a better lifestyle and having “more”, you focus on what makes you happy. It cites not seeing the joy in life as being one reason many may feel stressed about money.

In addition to this, the study also suggests working with a financial planner, as they can create a strategy that helps you identify your goals, understand what makes you happy, and how to potentially boost your financial wellbeing.

As the graph below shows, while many people across the age groups think about their future, most do not have a plan, even though one could help them achieve their goals.

Source: Aegon

The findings echo other research by Royal London, which suggests that working with a financial planner can reduce stress. As the following data from the study reveals, financial professionals can help you feel in more control of your money and help boost feelings of wellbeing.

Source: Royal London

Boost your wellbeing by creating “building blocks”

Aegon’s Financial Wellbeing Index suggests financial happiness comes with developing money and mindset “building blocks”. The following are the key components for each and tips on how to achieve them.

Money building blocks:

  • Income – covering the cost of living and of things that make us happy now. Instead of striving for more income, perhaps ask yourself if there is a less expensive way to fulfil your needs.
  • Rainy day fund – ideally to the value of three months’ income, in an easy access account. Top it up as soon as you can whenever you use it to ensure you maintain this level.
  • Manageable debt – keeping debts at a level your income can comfortably afford while leaving you enough to live on. Think of ways you may be able to reduce debt in the future.
  • Smart long-term savings – covering the cost of living and things that will make you happy in the future. Imagine the future lifestyle you want and seek advice to help you achieve it.
  • Valuables that make you feel secure in the long term – owning property and other assets that can build financial security into your life. Identify “good habits” such as saving more and speaking to a financial planner.

Mindset building blocks:

  • Knowledge of what makes you happy – experiencing feelings of joy and purpose everyday boosts happiness, so reflect on what makes you joyful and feel useful during the day.
  • A solid picture of your future self – having a picture of where you want to be in the future can help you get there. Think about the type of future you would thank yourself for achieving.
  • Savvy social comparisons – our financial wellbeing can be changed by the way we compare ourselves to others, so find a suitable role model to compare yourself against.
  • A long-term plan – people who write down a financial strategy save more regularly and do better financially. Think about what gives you joy and purpose and create a roadmap.
  • Strong nerves in a crisis – bad news can result in a knee-jerk reaction you later regret. Talking to a financial professional can help avoid this.

A financial planner can help you achieve both building blocks

Working with a financial professional can help you achieve a more positive financial mindset by:

  • Helping you create a strategy, a key component of developing your mindset building blocks. As many financial goals dovetail into personal aspirations and goals, a financial plan also helps you to identify the things in life that can bring you joy both now and in the future.
  • Ensuring you understand your financial position. This includes making sure your income and wealth is as tax-efficient as possible, that you have an adequate rainy day fund, and that your money works harder and smarter for you. Financial planners also help you manage your debt, giving you the peace of mind and confidence to make better financial decisions.
  • Clarifying where you are in terms of achieving your goals and providing insightful comments when life throws you a curve ball or the markets take a downturn. This helps prevent you making a panic decision that you could later regret.

Get in touch

If you would like to discuss your financial situation and find out how we may be able to help you improve your wellbeing, please email hello@ardentuk.com or call us on 01904 655 330.

Please note

This article is for information only. Please do not act based on anything you might read in this article.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

 

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