Why financial wellbeing is the key to a happy future

One issue many of my clients raise with me, especially early in our relationship, is that they are looking for a healthier work-life balance. In particular, they’re looking to carve out more time for themselves, but aren’t necessarily sure how best to achieve it.

The key constraint is running their own business, plus family and friend commitments.

There are clearly different ways to fulfil this aim. What works for one person will not necessarily be the right solution for another.

However, one factor that is common to every business owner is coming to terms with the fact that increased wealth does not necessarily result in a stress-free life. In fact, this is quite central to the way I advise my clients.

It’s a common myth in Western society that “time is money”. I’ll return to this in next month’s article.

Money can’t always buy you happiness

Leading insurers, Aegon, recently published a report entitled “How you can improve your financial wellbeing” which comes up with some interesting conclusions.

For example, it makes it clear that earning more does not make people’s worries go away. More than half (55%) of average earners and more than one in three top earners worry about money.

Happiness and fulfilment come down more to financial wellbeing than the size of your bank balance.

Financial wellbeing can be a complex subject, and many good books and reports have gone into detail about what it is, and how you can measure and achieve it. In simple terms, however, it can be summed up in a few bullet-points. Financial wellbeing is:

  • How you feel about the control you have over money and your financial future
  • About achieving a sense of security, feeling that you are in charge of your day-to-day finances and that you have enough money to make a choice about the life you live
  • About focusing on the things that make your life enjoyable and meaningful – both now and in retirement.

The report also found that having a strong vision of your future self is likely to have a direct bearing on your debt-to-income ratio. This may be because having an established goal which will make you happy means you’re more likely to manage your debt better.

The importance of having a plan

The Aegon report reveals that relatively few people have made a financial plan – something they say is key to “successful financial wellbeing”.

Knowing you’re on the right track, or what you need to do to get there, is better than hoping for the best. A positive outlook comes from the reassurance of having a plan, and the support you need to fulfil that plan.

The report also stated that the more concrete the vision of your future self, the lower an individual’s debt-to-income ratio.

The whole issue of having a plan is place is where advice, and support from a financial planner, can be fundamental to a happy and fulfilling future.

Two key steps on the journey to wellbeing

You’ll find a lot of useful information about financial wellbeing in the book, Because it’s about more than money, I wrote a couple of years ago.

It includes a seven-step process to get you out of the position you are in and start to solve your problems. This helps you to move to a more meaningful rewarding life, free from unhealthy stress.

Two of the seven steps are very pertinent to what you have read so far in this article:

1. Avoid making assumptions

It’s always advantageous to work with others to ensure that your assumptions and preconceptions aren’t holding you back.

Assuming anything about your life and money could stop you progressing. Assumptions can often act as a dead weight, holding you in a place you don’t want to be.

So, when you’re thinking and planning, be prepared to challenge every assumption you make. One way of doing this is to speak to people you trust and be courageous and brave enough to ask their opinion.

2. Think about a financial plan

Knowledge is power, and knowing you’ve got a plan in place to get where you want to be – and that it’s all achievable – can be the most powerful knowledge of all when it comes to your financial future.

The Aegon report found that relatively few people had made a financial plan, something the insurer says is key to “successful financial wellbeing”.

Source: Aegon

Your plan doesn’t have to be detailed to begin with, and it will develop and be subject to change as you go forward.

A good starting point is to sit down with your family and list all the things you want to do. Then work out a high-level time plan of when you want to do them.

After that, you’ll want to speak to an experienced financial planner who can help you start modelling various scenarios, taking into account your existing and projected future assets. In this way, the plan will start to come together, and you’ll get a clear idea of the steps you need to take to do all you want to.

In particular, a financial planner will help you answer the key question – “how much money do I need?” Having a definite number will help you see whether or not you are on-track to reach your goal and, if you’re not, take the necessary steps to improve your situation.

The impact of the pandemic

One of the effects of the Covid pandemic is that it gave people a lot of thinking time. The time you’d have previously spent commuting to and from work, or eating out at restaurants, was freed up. Many of you have reported that having this extra time gave you a rare opportunity for some serious reflection.

One thought many of you had was that you very much want a healthier work-life balance but aren’t necessarily sure how best to achieve it. After all, one of the key motivations for you setting up your own business was to give yourself more control and freedom.

Financial advice is more than about simply money, and how much you’re worth. You should see it as the means to an end, rather than an end in itself. The aim is to help you live the life that you want.

Get in touch

Financial wellbeing is very much at the heart of my role as a financial planner. If you think I can help you, please get in touch. Complete the contact form or call me on 020 3813 8265.


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