Young adults are giving up alcohol, marathon participation has rocketed, and our homes are bursting with more air-purifying houseplants than we can kill in a week. The wellness market was worth £3.5tn annually in 2018, so it was perhaps only a matter of time before financial health got a makeover to become financial wellbeing.
For those of us who aren’t fans of financial jargon, the words “financial wellbeing” seem warmer compared with “financial health”: while the latter implies your finances can either be “sick” or “healthy”, the former introduces shades of wellness to which more of us can aspire. So if you fancy boosting your financial wellbeing, let’s work out what it really means.
What is financial wellness?
According to a report by the Consumer Finance Protection Bureau (CFPB), financial wellbeing is a state in which “a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow enjoyment of life”. While it is possible to parse academic differences between wellness and wellbeing, most commentators use the terms interchangeably – and so, for the sake of variety, shall we.
It has been estimated that more than 26% of UK residents can be described as financially well, meaning they can pay for everything they need each month and are able to cope with unexpected changes to their outgoings or earnings. If you or someone you know falls well outside this bracket, you can seek impartial advice from the Money Advice Service.
For those who do manage to put a few pounds away every month – that’s 42% of Britons according to research released by NS&I – savings can open up a wealth of opportunities. Savings can give you a little extra breathing space and the chance to do the things you really love.
How can savings support a sense of wellbeing?
When respondents were asked by Mintel what they would be saving for over the next two years, the most popular answer – at 29% – was that they were saving to build a “financial buffer”. Surprisingly, however, the second highest answer – at 23% – was that they were saving without a specific goal in mind.
Now if you’re one of those recent marathon converts, you’ll know that having a goal in mind can really ramp up your achievement. So, why not set a savings goal that’ll motivate you? “Having a goal and seeing positive progress towards it triggers that feelgood factor,” says Jill Waters, retail director at NS&I. “Regular rewards and a sense of achievement make saving much more enjoyable – and more likely that you’ll stick to it.”
The rewards we seek today are very different from the days of conspicuous consumption. So much is made of experiences being “the new luxury” instead of products that it is now almost certainly an old luxury. Either way, Generation Z and millennials are at the forefront of this experiential revolution, perhaps because they understand that experiences not only make them happier than material possessions, but they’re also perceived as a better use of money.
How well are the finances of Gen Z and millennials?
Occasionally characterised as “generation rent”, it has been claimed that younger generations have given up hope of future stability in favour of perpetual living – and spending – in the moment. Yet, recent research from NS&I found that three quarters of 18- to 24-year-olds and 63% of 25- to 34-year-olds cut on spending in order to save. The report also found that 87% of 18- to 24-year-olds thought saving was important, compared with just 77% of all age groups combined.
Waters says: “Often there is a sense that younger people are ambivalent about saving for a rainy day, but this research challenges that myth. If we want to build a stronger savings culture, it’s clear we have to support the younger generation in their aspirations to save.”
What’s the future of financial wellness?
“Even if you can only save a little, saving gives you the opportunity to say yes to things, and the ability to treat yourself, family, friends and support people or causes that are important to you,” says Waters. “For us, saving is an act of intergenerational kindness and we’re keen to help people to achieve this level of wellbeing, however we can.”
Having something to save towards can make putting money aside easier. With the help of NS&I, you can reach your goal too. Visit nsandi.com for more information
