Money is everything. When you have enough money to feel financially free, it’s great. However, when you don’t have the money you can become consumed by your emotions. The relationship between your finances and your quality of life is known as financial wellbeing.
Also known as financial wellness, positive financial wellbeing is a sense of security and confidence that you have enough money to meet your needs. Financial wellbeing is about being in control of your money and having the freedom to make your own financial choices.
We want you to be in control. We want you to be free to do more of what you love. So, in this guide to financial wellness and wellbeing we explore:
- What is financial wellbeing?
- Why is financial wellbeing important?
- How does debt affect mental health?
- How does mental health affect your finances?
- How do you improve financial wellbeing?
Why is financial wellbeing important?
When you’re suffering from money worries, the stress can become all-encompassing. Money and mental health are intrinsically linked. Research has shown that people with problem debt are more likely to experience stress, anxiety and other mental health problems.
Instead of using your disposable income on building up savings, or taking a relaxing holiday in the sun, or purchasing that new car you’ve been talking about forever, it goes on bills and repayments. If you are living in your overdraft or making multiple high-interest loan repayments means you are probably finding it hard to make ends meet - let alone book a holiday.
In a worst-case-scenario, poor financial wellbeing can affect your physical health as you may struggle to purchase the medication you need, or even pay for food for yourself and your family.
It’s important to consider how your financial choices impact your life, your relationships and your mind. It’s time to take control of your finances and enjoy the benefits of good financial wellbeing. Holiday, anyone?
Financial Wellbeing and Mental Health
One in four adults will have a mental health problem at some point in their life. One in two adults with debts has a mental health problem. One in four people with a mental health condition is also in debt. This data, published by the Royal College of Psychiatrists, shows us how closely money and mental health are aligned.
Whether mental health is playing a part in your causes for debt, or your debt is taking a strain on your mental health, poor financial wellbeing can quickly escalate into a vicious cycle. And when you’re in that cycle, it can be difficult to muster the energy to deal with it. It’s tough. It’s draining. But it is possible to get out of it.
How does having a mental health problem affect your finances?
Financial wellbeing can also be affected by pre-existing mental health conditions such as anxiety, depression, and high-stress levels. Money-related stress can be a trigger for these conditions, all of which can drastically affect your mood.
Some of these conditions will affect how you behave, as well as your emotions. Increased impulsivity and memory problems, both common symptoms, can make it harder to keep on top of finances.
Many people with mental health conditions report that their spending patterns change significantly during periods of poor mental health. In a survey from Money and Mental Health Policy Institute, they reported that:
- 93% spent more than usual
- 92% found it harder to make financial decisions
- 74% put off paying bills
- 71% avoided dealing with creditors
- 56% took out a loan they would not have otherwise taken out
How can I improve my financial wellbeing?
The future starts now. If you want to take control and improve your financial wellbeing, there’s plenty of ways to approach it. Whether you want to work harder to become debt free or want to keep yourself afloat, explore our financial wellbeing tips to build your future.
We all know budgeting is important. It’s tried and tested. Ignoring your outgoings can lead to over-spending, unexpected charges and missed payments. So if we all know it’s the key to financial control, why is it so difficult to stick to?
When starting a budget you need to outline your income, outgoings and your day-to-day spending patterns. Having a clear understanding of exactly how much is coming in and what’s going out and when will give you confidence in managing your finances.
Having a budget means you are:
- Less likely to end up in debt
- Less likely to get caught out by unexpected costs
- More likely to have a good credit rating
- More likely to be accepted for a mortgage or a loan
- Able to spot areas where you can make savings
- In a position to save up for holidays, a new car or other social spends.
If it’s clear you’re spending more money than you’re earning, you need to figure out where you can make changes. This can include small changes, such as making lunches at home or cancelling your gym membership to go for a run instead. Or you can look at bigger changes, like switching suppliers refinancing your high-interest debts. There’s no one-size-fits-all solution, it’s about figuring out what works for your situation.
Refinance Your Debts
When your debts get too overwhelming, or you can only manage minimum repayments, budgeting on its own may not be enough to make a staggering difference. So, it is time to start again.
Refinancing your loans can help lower your repayment rate and consolidate various debt-related outgoings into one monthly payment. With a peer to peer loan, you can refinance for the better and take control of your debts and outgoings.
With lower monthly repayments, you’ll free up cash to do more of what you love. Consolidate all of your high-interest debts into one smaller monthly payment, and get rewarded for staying on track.
With a Leap loan, you benefit from working towards positive financial wellbeing. We’ll reassess if we can lower your monthly repayments with our Dynamic Rate, and we’ll let you pay back your loan early or make bigger repayments with no penalties or fees. So you can work towards financial freedom.
Get Help and advice:
If you’re stuck in a financial rut you can seek help from the Citizens Advice Bureau Debt Management and Debt Support Trust, both of which offer a free advice service. We also recommend looking at Stepchange.org, nationaldebtline.org, mind.org.uk - all of which focus on the relationship between money and mental health in a bid to improve financial wellbeing.
The Definitive Guide to Financial Wellbeing: Key Takeaways
- Financial wellbeing is the relationship between mental health and finances and the impact it has on your quality of life.
- The negative impact of poor financial wellness affects your mood, your social life, your physical health and your finances.
- How to improve your financial wellbeing: Force yourself to look at your finances, create a budget and stick to it, look to consolidate your debts.