What is Financial Wellbeing?

We all know how important our physical and mental wellbeing are. But have you ever thought about your financial wellbeing and the effect that it can have on your life? In this blog, we look at what financial wellbeing means, why it’s important and how you can build on your own financial wellbeing.

What is financial wellbeing?

When we talk about wellbeing, lots of us might picture juice cleanses and beautiful sunrises. But financial wellbeing is a little bit different. 

According to the Money & Pensions Service, financial wellbeing means “feeling secure and in control of your finances”. You might also have heard it being called financial wellness, financial fitness, and financial literacy.

It’s not about buying artisanal smoothies, or going to luxury yoga retreats. Instead it means being at a place where you feel confident that you can cover your monthly costs, plan for your future, deal with short-term financial emergencies and still be able to enjoy the things you love. (And if the things you love are artisanal smoothies and yoga retreats, then that’s great!)

Why is financial wellbeing important?

Just like your physical and mental wellbeing, your financial wellbeing has a big impact on your day-to-day life. Feeling confident, calm, and in control of your cash means you’re free to focus on the things that matter to you without looming monetary pressure. 

But in reality, everyone has times in their life when they’re worried about money.

Worrying about your money, especially for long periods of time, can have a real impact on your mental and physical health. Financial stress can cause:

• Anxiety
• Panic attacks
• Low mood and depression
• Heart palpitations
• Difficulty sleeping
• Weight changes
• High blood pressure
• And many other emotional and physical symptoms

On top of all of that, people struggling with their financial wellbeing can develop coping habits that actually make the situation worse. These can include overspending, irrational financial decisions, or complete social withdrawal in an effort to save money or avoid feelings of shame or guilt.

Realistically, it’s not possible to rule out worrying about money entirely. Life has a tendency of throwing us a lot of curveballs! But though managing our money can sometimes feel overwhelming, there are things we can do to help build our financial wellness. 

Regular exercise can build physical health. Talking therapy can help us find ways to manage our mental health. And being mindful about our money can really help to improve our financial wellbeing.

How to improve your financial wellbeing

When you’re struggling with your financial wellbeing, knowing where to start can be tricky. But you don’t have to radically change what you’re doing overnight to begin your financial wellness journey. It’s all about the small steps.

Build a new budget

Maybe you’ve tried budgeting and just can’t seem to make it stick. Maybe you created a budget a while ago, but with inflation, it’s no longer working as it used to. Don’t worry - now’s the perfect time to make a new one.

Check out our blog on where to start with your budgeting for tips on how to make the best budget for your needs. 

Top tip: Budgeting isn’t always the most exciting activity, so find ways to make it enjoyable. Find a planner or budgeting app that suits the way you think, and looks appealing to you. Whether you prefer the simplicity of a spreadsheet or a decorative PDF print-out, it’s important that your budget works for you.

Set a small savings goal

When you’re just starting out, having a huge goal in mind like buying a house or a new car can feel pretty daunting, so set yourself a smaller target to begin with.

Think about something you’ve wanted for a while, but has always been just outside your usual monthly spend. Maybe it’s an item of furniture, or a short weekend getaway, or tickets to an event. Then break down the cost over three months, save that amount each month, and then treat yourself!

Lots of smaller goals can help to keep you on track and develop your savings habits so that when it comes to saving for the big stuff, you know you’ve got this.

Create a spending journal

Every good wellbeing journey starts with a journal, right?! However, journaling can be a great way of understanding our motivations and our goals.

For a week, try writing down any impulse purchases you might make, whether it’s a snack, some new clothes, or something bigger. Then write down why you wanted to buy it. Then write down how that purchase made you feel. 

Understanding our spending can be a useful way to help us change our habits if we’re struggling. Because money and emotions are so connected, taking a step back and examining our motivations can be eye-opening and help us understand our relationship with money. 

Learn a little every day

We’re not saying take out a Financial Times subscription just yet. But if you’ve never been given much information on how to manage your finances, then a little can go a long way.

It’s a big area to understand, so start small. Spend some time looking at YouTube, find a financial channel that resonates with you, and subscribe to their videos. Try out a money podcast for beginners, like The Mr MoneyJar Show. Follow a financial expert on TikTok or Instagram. Or take a look at some of the other blogs on the Loqbox blog. You’d be surprised how much you can pick up in just a few minutes.

Keep an eye on your credit score

When you take out any form of credit such as a loan or a credit card, the company lending you the money will look at your credit history. Your credit score is a numerical indicator of how lenders might view you based on your credit history. 

Having a credit score that falls in the “good” to “excellent” categories is more likely to get you more favourable rates from lenders. This means that when you’re paying the money back, you will likely be paying less than you would with a lower credit score. 

You can check your credit score with each of the three credit reference agencies (or CRAs) for free. Equifax, Experian, and TransUnion each have their own scoring system, meaning you actually have three scores to check. 

Knowing your credit score is an important part of your financial wellbeing, as it can help you understand how your finances are viewed by certain companies and financial institutions. Click here to find out more about how to improve your credit score.

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