The link between finance and wellbeing

The current economic climate and cost of living crisis in the UK makes for bleak reading to say the least.

With families facing the biggest fall in living standards in 60 years, economic activity shrinking for the fourth month in a row, and GDP predicted to fall 0.4% in 2023, it’s understandable that people across the country are worried about their financial situation.

The overall feeling is a lack of control – we can all identify with that. But what’s not so obvious is how much of a positive impact financial advice can have on that feeling. So we thought it would be worth digging into the close relationship between financial planning and wellbeing – it might even put your mind at ease.

Money makes the world go round

Whether we like it or not, money is absolutely central in our lives. It should therefore come as no surprise that money is one of the main things we worry about throughout our lives.

Indeed, LCP found that financial health is second only to physical health in terms of what people worry about the most. Yet it can be misleading to treat these two as separate categories as money worries can often lead to detrimental impacts on our health. For example, research from Aviva found that 38% of those between 45 and 54 lose sleep over their finances. Meanwhile, a staggering 86% of people say their financial situation exacerbates their mental health problems.

These links clearly demonstrate that our finances are inherently tied to our sense of wellbeing. The root of the issue is that, as mentioned, money is the key enabler in our lives, so it follows that when money becomes an issue, we feel a profound lack of control over what we can and cannot do.

The cost of living crisis has thrown this issue into stark relief. With household incomes predicted to fall by 4.3% over 2022-2023, people are being forced to cut back on things like spending on non-essentials, using gas and electricity, and making non-essential journeys. Of course, one could emphasise the ‘non-essential’ element here, however it is precisely the non-essential things that make life interesting, comfortable, and enjoyable, contributing to our overall sense of wellbeing.

So, in such choppy financial seas, what can we do to keep our finances, and wellbeing, on an even keel?

Taking control is the key factor, and there a number of different ways that this can be done.

Investing

Leaving money in savings accounts, especially when inflation rates are soaring as they are now, offers relatively marginal returns, and can even leave you staring at real term losses over time.

In contrast, actively making the decision to invest your money not only increases your potential returns but also leaves you with the satisfying feeling that you are taking action to improve your financial position.

And the stats back this up, with Blackrock finding that 43% of people say they feel better about their financial future after investing.

Of course, making investment decisions is a crucial and difficult task, as there is always risk involved, which makes it all the more sensible for you to be…

Working with a financial adviser

By far the best way to establish control of your finances is by working with a financial adviser. The same research from Blackrock found that 76% of those who invest using a financial adviser have a positive sense of wellbeing.

Given the close relationship between finances and wellbeing, this is hardly surprising. But what is it exactly about working with an adviser that leads to such positive outcomes?

At AAB Wealth, we build close, personal relationships with each of our clients. Giving financial advice isn’t just about numbers, spreadsheets, and complicated investment formulas. It’s about getting to know people deeply, understanding what makes them happy, what they value, what their life goals are, and using this information to tailor our advice in a way that suits their particular needs.

In exactly the same way as a counsellor needs to understand you to be able to give you life advice that works, we take the time to understand what makes our clients tick in order to give bespoke, effective financial advice.

Once we understand you as a person, only then will we start putting together a package of tailored financial advice covering investment strategies, tax, retirement and inheritance planning, cash flow modelling and more to build a financial strategy that gives you vital peace of mind.

Ultimately, the links between our finances and wellbeing are too tightly wound for us to ignore. However, by taking control, making positive, outcome-oriented decisions, and working closely with a financial adviser, you can steady the ship through stormy seas and look forward to the calm open waters of financial, and personal, wellbeing.

If you want to find out more about how AAB Wealth can help you, get in touch today.