The Fundamentals of Financial Wellbeing

Wednesday, April 21, 2021

The Fundamentals of Financial Wellbeing

 Wellbeing is the buzzword of the decade. The world is finally waking up to the importance of wellbeing, from workplace wellbeing to at-home self-care. Unfortunately, financial wellbeing often gets left out of the conversation. And in some ways this is no surprise, talking about money has often been a taboo in British culture. The unfortunate irony is that money is exactly the thing we need to be talking about most. Indeed, most people are more anxious about their finances than they are about their health, relationships or career, and poor financial wellbeing can have a negative domino effect on all areas of our life – regardless of our income.

40% of UK employees have less than £100 in savings for an emergency.

Should an emergency arise, many of us are simply unprepared, leading to a knock-on effect on our mental and physical health, and work performance. This causes a great deal of anxiety: over a third of us Brits claim financial stress keeps us up at night.

Furthermore, many of us simply don't save enough to invest in the things that really matter to us long-term.

So, how do we prevent this, and maximise our financial wellbeing?

Here are the fundamentals to get you started:

  

1. Check Out Your Situation

When it comes to financial wellness, ignorance is not bliss.A key building block of financial health is simply being in-the-know about your situation. When it comes to our bank accounts, a lot of us bury our heads in the sand, so if you can just be aware of your finances you're already a step ahead.

It may be overwhelming at first but knowing your income and expenditure will give you confidence and know-how to make empowering decisions.

Key things to check are your:

  • PENSION(S)- Do you have one or several from different employers? How much do you have saved?
  • CURRENT ACCOUNT(S) - How much money do you have here? Could some of that be placed into savings?
  • SAVINGS ACCOUNT(S)- How many? How much money in each?
  • INVESTMENTS - do you have investments? How much?
  • DEBT - How much debt do you owe have? Are there deadlines you need to know about?
  • COMMITMENTS - regular payments you have to make. (i.e. rent, utilities,  phone bills, monthly subscriptions, mortgage payments)

2. Make a Long-Term Plan

Now you know your financial status, it's time to start planning for the future. Start thinking about where you want to be financially in 1, 5 or 10 years time. Before you can achieve your goals, you need to se them. Figure out what you want, and what you need.

Think about how much money you want for your pension. Do you need to save up for a house? Tuition? A holiday fund? And perhaps most important - Do you have a rainy day fund?

The data is clear, those who have 3-6 months of living expenses saved up have significantly higher financial happiness than those who do not. And it makes sense, with a buffer zone they simply have more time to figure things out.

Now you can make a budget, and plan how much you need to save or invest each month to reach your goals.

 

3. But Also...Start Small

Long-term planning can seem overwhelming, so you can definitely start small. In fact, short-term saving, or budgeting for the month ahead, is perhaps the most important aspect of financial health. After all, big goals are reached only through small consistent actions. Also, for people on the lower end of the wage scale, or those of us who haven’t yet gotten into the swing of saving, this is a brilliant place to start.

Monthly budgeting over time can lead to huge savings.

Simply detract your pension, rent, utilities and essential spending such as grocery shopping, and see how much you have left over for the month. From that, you can detract any pleasures you want to keep, such as a small clothes budget, and if there's any left over, we can pop that right into our savings.

Ideally, we can leave a little left over each month as a cushioning.  Having a little wiggle room from month-to-month can be a stress-reliever in case a hiccup comes along; such as needing a laptop repair.

If we focus first on budgeting for the month ahead, we can start seeing ourselves as a ‘saver’.

Once we identify as being a 'saver' we can easily pick up the right habits to start saving on a grand scale. Any improvement, however small, is a step in the right direction.

Remember: slow and steady wins the race.

 

4. The Early Bird Catches the Worm

The importance of this pre-planning is a key value for us, which is why we offer pay before payday. Being early to view all your upcoming bills and setup automatic transfers to your savings helps you stay ahead of the curb and back in the driver’s seat.

This allows you to more time to plan, prep, spend and save the money you worked so hard to earn. Indeed, an early pay day adjoined to short and long-term planning is a golden trio in the world of personal finance.

At Wagebox, all your personal finance is streamlined into one place, so it’s easier than ever to have a handle on your money and stop fretting about finances.

You don’t have to be a money mastermind or earn a 6-figure salary to have feel the relief that comes with financial freedom.