The concept of financial wellbeing has been widely discussed in the UK of late, particularly as the coronavirus pandemic has continued to decimate local economies nationwide.
In this respect, Covid-19 has exacerbated a number of existing issues in the UK, with one report from 2019 finding that 36% of the working UK population would struggle to pay a bill of just £100.
In this post, we’ll discuss the concept of financial wellbeing in more detail, while appraising the main strategies that can be used to improve this part of your life.
What is Financial Wellbeing?
In simple terms, financial wellbeing refers to a state where an individual can meet their current and ongoing fiscal obligations, with a view to sustaining financial security in the future.
For people who have low financial wellbeing, however, it’s likely that they’ll live under a constant strain and continue to experience high levels of stress as they attempt to manage their finances on a month-to-month basis.
As you can imagine, there’s no specific financial sum that you need to have in your bank account to indicate wellbeing, as this will depend on your earning potential and real-time cost of living. However, there are some rudimentary principles that underpin this concept, the most important of which pertains to the level of stress associated with your current and future financial fundamentals.
The total level of debt that you hold also impacts directly on your financial wellbeing, particularly if you’re struggling to pay this in full or on-time. The same principle applies to your disposable income levels and savings value, as well as the level of acumen that you display when managing your finances.
Key Strategies and the Role of Investment
If you’re new to the concept of financial wellbeing (and how to achieve it), it’s important to develop informed and viable strategies that can provide practical assistance.
One of the most obvious ideas is to create a working and accurate budget that matches your cash flow, particularly in relation to your weekly or monthly earnings and cost of living.
Try to deal in pence rather than pounds when creating your working budget, while creating a viable financial contingency wherever possible.
From a longer-term perspective, you may also benefit from comparing your month-to-month spending figures. This will highlight areas of excess spending and create opportunities to reduce costs in a manageable way, allowing you to commit more of your earnings into savings.
If we extend this idea further, you can take your accumulated savings and seek out viable investments under the guidance of a wealth management expert.
This way, you can increase the value of your savings and potential returns over time, creating greater fiscal security for the future and a far greater sense of financial wellbeing.