Next month, the Mental Health Foundation will host Mental Health Awareness Week. Running from 10 to 16 May, it’s a week of reflection on the benefits of looking after mind as well as body.
Mental health has become increasingly important over the past few years, as its impact on our everyday wellbeing has become more widely understood. This has become especially important over the past year, as periods of isolation and anxiety have become common for many of us.
When it comes to triggers that reduce our sense of wellbeing and damage our mental health, financial concerns such as managing money often find their way to the top of the pile.
Research from the Money and Mental Health Policy Institute found that, across a survey of 5,500 people, 46% of those in problem debt also had a mental health problem.
Issues with money and mental health can create a vicious cycle where your mental state negatively impacts your ability to manage your money effectively, fuelling the feeling that you can’t keep track of your finances. In fact, 86% of survey respondents said their financial situation had made their mental health problems worse.
When it comes to alleviating stress like this, financial planning can be invaluable. It can help you feel more confident and in control, helping to boost your emotional wellbeing.
Here are a few simple and straightforward financial planning tips that can help improve your mental wellbeing.
Create an emergency fund
One of the simplest financial planning steps you can take is to create an emergency fund for unexpected expenses.
Unpredictable events, such as your car breaking down or even losing your job can be stressful if you’re worried that they’ll impact your ability to pay your bills.
Having an emergency fund for events like these can help to cover any expenses, giving you space to breathe. And, even if you never need to use it, an emergency fund gives you the reassurance that you always have a rainy day fund in place, no matter what happens.
There’s no exact science for how big your emergency fund should be, but good practice is to have at least three months’ worth of your ordinary expenses. You should keep this in an easy-access savings account, and only use it when you really need to.
By having a designated pot for emergencies, you can be confident that you’ll always be able to make ends meet, even in difficult circumstances.
Make a budget
It may be a cliché, but making a comprehensive budget truly is one of the best and easiest ways to increase your confidence in your finances.
A budget can be a great way to visualise exactly where your income and expenditures go each month. Make sure you include everything on your budget and continuously update it as your circumstances change.
That way, you’ll always be able to see exactly where your money goes each month. You may even find ways to make changes if you can see where you’re spending excessively or unnecessarily.
Avoid emotional spending
When you feel bored or slightly lower than usual, it’s easy to fall into the trap of buying things you don’t want or need to boost your mood. This is known as “emotional spending” and can be a hard habit to break.
Research by Barclaycard found that Brits spent £40.6 billion on non-essentials during the first lockdown in March 2020, as anxiety and restrictions fuelled an emotional spending boom.
Spending to improve your mood can give you a temporary boost. But, as with any short-term fix, it can have the adverse effect if you overspend, ultimately costing you more than you would like and reducing your confidence in your ability to manage your money.
By cutting down non-essential spending and tightening your purse strings, you can avoid the negative impact that emotional spending can have on both your mind and your bank balance.
One simple trick is to leave an item you are thinking of buying in the online shopping cart for 48 hours. If, after a couple of days, you still decide you want the item then go ahead and buy it. However, time to reflect might reduce the impact of the “impulse”, and you decide it’s something you no longer need.
If you’d like help with strategies to reduce your emotional spending, please do contact us.
Have the right protection in place
Many people either think that protection is too expensive, or that it’s not worth it because you’ll probably never need it. However, having the right protection cover in place can alleviate concerns about money, and give you greater peace of mind.
For example, many people think of life insurance as an expense just for older people. In reality, life insurance provides useful protection for people of any age.
This is especially true for those with mortgages, as you can use life insurance to repay your mortgage if something happens to you, enabling your partner, spouse, and family to remain in your home if you’re no longer around.
Illness and income protection can also help you sleep better at night as you know there’s financial support in place if you’re suddenly unable to work due to ill health or an accident.
Speak to a financial planner
One of the very best ways to boost your mental wellbeing when it comes to your money is by speaking to a qualified financial planner.
A September 2020 report by Royal London found that those who received financial advice from a professional were more likely to feel in control of their money and more confident for the future.
Researchers spoke to over 4,000 consumers, with more than two-thirds (68%) of those taking financial advice responding that they felt in control of their finances. Just 32% of respondents taking financial advice felt anxious about their household finances, with 63% of them stating that they felt financially secure and stable.
Professional advice can make all the difference in helping you manage your money, assisting you in achieving greater emotional wellbeing through your finances.
Get in touch
If you’d like to take control of your finances so you can be more confident for your future, please speak to us at Cordiner Wealth. We can give you personalised financial advice that could help you manage your money.
Email hello@cordinerwealth.co.uk or call 0113 262 1242 to speak to one of our advisers.
Please note:
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.