Seven tools to mind your mental wealth for life
There are two parts to good ‘mental wealth’: financial resilience, and financial wellbeing. When we talk about personal resilience, it’s about whether we have enough shock in our systems to prepare us for unexpected ‘bumps in the road’, and the same is true for our finances.
Financial resilience is being able to deal with setbacks: ‘Do I have enough emergency savings to pay for unexpected costs without spiraling into debt or it seriously impacting my day-to-day life and mental health?’. For example, if the washing machine breaks ‘am I ready to deal with that payment?’
Financial wellbeing is about making decisions and taking action now, to create wealth for yourself later over a longer time period. Wealth is grown in decades, not days, so preparing for the future has to happen sooner instead of being put off.
1. Kick unhealthy habits
Before embarking on a new health regime, it’s important to tackle the bad first, like smoking and eating junk food.
With finances, it is the same, and the most urgent issue is getting out of high-interest debt if you’re in it, such as store cards or credit cards. Not tackling these debts first defeats the point of any good budgeting and saving for the future.
If you are able to pay more than the bare minimum monthly payments, make sure you know what interest you are paying and see if you can lower it by taking out a loan that charges you less interest.
It might feel scary, but it can often have better rates that allow you to put the money saved towards paying off your balance, resulting in a quicker end in sight.
2. Don’t be afraid to talk about money
When people ask you ‘how are you?’ the chances are you don’t mind sharing that you’ve had the flu, or have recovered from a recent injury. But you’re probably less likely to discuss your mental health or money worries. Like with mental health challenges, bottling up financial concerns feeds anxiety.
Everyone has had a money issue at some point in their life, so there will be people in your network with advice and learnings that could be useful to you.
Surprising as it might seem, your HR department or employer is somewhere you can turn to for example. More and more companies offer financial wellbeing support, because they know anxiety about money impacts mental health, and therefore how people perform at work. If they don’t have one, ask them why not. It could prompt them to initiate one.
You can even request that your employer works with a company like Neyber, which works with employers to offer fixed-rate loans to its employees, for anything from consolidating debt to bigger ticket items like buying a house, which is paid back by a salary deduction.
If they don’t have one, ask them why not. It could prompt them to initiate one. If you’re worried, anxious, or confused about your personal finances, saying it out loud and hearing other people’s stories can help be the first step towards making a change.
3. Ask for help and advice
Or is there someone in your personal network you can turn to for advice? A friend’s parent if you can’t turn to yours, or someone you are friendly with and talk to regularly, but on a professional basis, such as a business owner in your local area. It always surprises people how often others want to help, but they’ll probably be flattered and if they don’t have relevant advice, they may know someone who does.
If you’re worried, anxious, or confused about your personal finances, saying it out loud and hearing other people’s stories can help be the first step towards making a change. There are even Facebook groups dedicated to topics like debt where you can turn more anonymously to hear other people’s experiences and ask what’s worked for them.
Since the pandemic, numerous consumer-friendly personal finance blogs, apps, Instagram accounts, and podcasts have been launched, dedicated to talking all things money – including debt – meaning you can look outside of your personal network for advice or to hear other people’s experiences and what worked for them. @GetWokeNotBroke, @MoneyMedic, and @AllOurBestIntentions are great Instagram accounts, and the ‘This Is Money’, ‘Money Clinic’, and ‘MoneyBox’ podcasts all help with this.
4. Use the tools available to your advantage
Once you have mastered the basics and built your financial reserves and resilience, and you know you can deal with life’s curveballs, it’s time to invest in your future.
Like exercising and eating well, the payoff isn’t always immediate, but the choices you make now will set you up for financial health in your later years.
5. Raise your awareness and know what help is out there
One of the reasons personal finance can feel daunting is due to just how much information is out there. There’s so much, so how do you know what the right thing to do is? It can be stressful worrying about making the right decision, but from my experience making no decision at all is always worse.
Not everyone wants to research online, or read books on it. Try and integrate financial learning into what you do like.
6. Set long-term financial goals
A good rule of thumb is to have a pot worth ten times your annual salary by the time you retire, which sounds like a lot, but is achievable by starting early and breaking it down into simple steps – like setting a savings goal for every decade you’re in employment,
7. Make your money a force for good
Did you know that acting out of a higher purpose can help reduce stress and improve emotional wellbeing? You may not have considered this, but one way that you can benefit your future self, the planet, and the rest of the people who live on it are by using your money as a force for good – and you can do this by engaging in where your pension is invested.
Money makes the world go round, and when you invest in your pension, you are investing alongside side millions of other people. This amounts to billions of pounds. Your pension is being invested in companies around the world and how these businesses behave has a huge impact on the wellbeing of our planet.
Rob Gardner is director of investment at SJP Wealth Management.