Financial stresses, pressures and concerns can be a huge burden for many people – particularly in today’s economy with the cost-of-living crisis, rising prices and inflation.
A recent Financial Lives survey, from the Financial Conduct Authority (FCA) which questioned people on how they deal with money, found that nearly 12 million people feel overwhelmed or stressed dealing with financial matters, including 40% of adults with credit or loans saying they suffer anxiety and stress.
Digital content creator Patricia Bright studied accounting and finance at university, and worked as a business analyst and consultant for investment banks for seven years before founding her own companies The Break Social and Uwa World.
Bright explains that she understands the correlation between finances and wellbeing, as despite working in a corporate industry that is focused on money, she admits her time there “never taught” her “anything about personal finance.”
“It actually put me in an environment with lots of wealth, but I wasn’t making smart decisions that were helpful for my personal finance wellness,” she says.
We spoke with Bright who now has a heathy relationship with her finances and Dr Elena Touroni, a consultant psychologist and co-founder of The Chelsea Psychology Clinic, about what good financial health looks like, the correlation between finances and wellbeing, and how to improve both.
What are the signs that financial health is having an impact on wellbeing?
Touroni explains that when money is tight, it can have effects on people such as their sleep, mood, relationships and even their physical health.
She explains it’s not about “pounds and pence. It’s about how supported and stable we feel on a daily basis.”
Another sign Bright explains is the concept called ‘lifestyle creep’ which means the more people earn, the more they spend, which often leads into a more negative situation.
“Being around the investment banking world for example, I would notice juniors spending all the money they made and struggling at the end of the month. These are things people should be aware of – the feeling of being out of control,” Bright says.
“I truly think that people know when they have a problem with their finances and that feeling can be suppressed. You have to be in tune with how you feel to know where you financially are. Ask yourself if you feel anxious, do you have a tightness in your chest when you think about bills, or if you get a ticket or an expense. All of these things are signs.”
“For me, I knew when I couldn’t stop working and was anxious to stop working and enjoy life, because I wanted to have all my ducks in a row or reach this imaginary figure in my head. Once I let that go and looked where I was at and created a plan, I felt a lot more comfortable and relaxed.
What does good financial health feel like?
Touroni explains that financial health is closely tied to how safe, secure and in control we feel. “When things are going well financially, it can boost confidence, reduce stress and give people the freedom to plan and enjoy life.”
Bright echoes this as she explains it also adds to feelings of calmness. “You might not have everything you need in that moment,” she says. “However you have a plan, a strategy, expectations and most importantly you feel comfortable with where you plan to go or where you need to be. You feel prepared.”
“For me personally, good financial health allowed me to make choices that were right for me in comparison to making choices where I had to compromise what I believed in or how I wanted to spend my time.”
How can people work on their financial health?
“The first thing I would always say is you need a budget,” Bright says. “You really have to open your eyes and get an awareness of what’s going on. A lot of people operate in blindness and shut their eyes, because they don’t want to look at their finances.
“However, at least if you have a budget, you can get to grips of where you’re at and that’s a really valuable tool.”
“The next step would be looking at how you can increase your wealth opportunities – whether that’s upskilling so you can get a job which gives you more opportunities or even negotiating your salary – just look at ways to increase your wealth.
“Thirdly, it’s about maximising how your wealth can work for you. Look at what the options are around investing or how you can either minimise your taxes or make sure your money makes money.”
Touroni adds that people should “start small” when they are trying to improve both their wellbeing and finances. “When things feel out of control, even simple steps like writing down what’s worrying you or talking to someone you trust can help ease the pressure,” she says.
“Reaching out to a debt charity or financial adviser can be a turning point. From a psychological point of view, it’s about regaining a sense of control, bit by bit. And above all, know that you are not alone. Financial stress is incredibly common and support is out there.”
