Article by Chieu Cao, CEO of Mintago
This is admittedly easier said than done in the current economic climate.
Britain is in the midst of a cost-of-living crisis, with inflation reaching a 40-year high of 9.1% and energy and fuel prices soaring beyond recognition. And such a crisis is already having a negative impact on Britons’ finances. Indeed, a survey amongst 1,024 UK adults in full-time employment, commissioned by Mintago, found that almost two thirds (63%) of respondents have experienced a deterioration in their financial situation since the beginning of 2022.
Unfortunately, evidence suggests that the financial deterioration of people’s financial situation is having a negative impact on individual’s mental health. According to Mintago’s research, most (56%) Britons now consider their personal finances to be their greatest source of stress. And worryingly, almost a third (32%) claim that they struggle with day-to-day activities because of such financial stress. Elsewhere, over a fifth (23%) of respondents said that they are losing sleep because of financial concerns.
Such findings are alarming; it suggests that unless this problem is addressed, Britons’ financial and mental health will only worsen in time.
Of course, the general financial situation is enough to trigger stress amongst individuals. However, there are some specific triggers which are central causes to such stress. And identifying these will help people to obtain the appropriate support.
Evidence suggests that a lack of control over one’s financial situation could be a core trigger of stress. Indeed, according to Mintago’s aforementioned survey, over eight in ten (82%) UK adults claim they are financially unprepared, if their employment status was to suddenly change. A further 70% are concerned that their financial situation will worsen in the near future. These figures suggest most Britons feel they do not have control over their financial futures. And this will inevitably weigh on their minds and induce a great deal of stress.
A seemingly lack of understanding about one’s financial situation also appears to be causing stress for Britons. For example, majority (51%) of Britons have not conducted a thorough audit of their financial situation, despite being in the midst of a cost-of-living crisis. So, if individuals do not have a full grasp of their current financial situation, they will probably find it more difficult to change their spending or saving habits to improve their prospects.
Further fuelling this lack of financial comprehension, is the fact that people simply do not know where to find help. According to Mintago’s research, a third (33%) of adults need help with their financial management, but they do not know how to access it. From here, it is possible to understand how Britons get locked into a vicious cycle of losing control of their finances and finding it difficult to help themselves.
Clearly, something must be done to break the cycle and help people to get their finances, and consequently their mental health, back on track. The question, of course, is how can this be achieved?
Whilst it might sound like an obvious starting point, struggling Britons will likely benefit from opening up about their financial concerns to a financial adviser, friend, family member, debt charity, or even their employer. This does not, admittedly, guarantee a quick fix to their problems. However, just being able to talk through their issues will help to lift a weight off their mind. Better yet, their confidant may help them to create a logical plan to help them get their finances on track.
Whilst it might be tempting to stick one’s head in the sand when it comes to financial problems, doing so will only cause them to escalate. So, UK adults would be wise to be proactive and conduct a thorough audit of their financial situation. Doing so will help them feel more in control of their financial situation, and even identify where changes can be made to improve their situation.
Individuals should also make use of financial tools and platforms, which can help them to keep tabs on all aspects of their finances. For example, some platforms can hold the entirety of their financial information on a user-friendly mobile phone application or dashboard which can help them keep track of their various pension pots or savings, in addition to mortgage and credit card information. And of course, having easy access to such information contributes to people feeling more in control and informed about their financial situation.
Better yet, such platforms can help users to actively manage their finances more efficiently; from making mortgage repayments to managing their investments.
Within this current climate, financial stress is, unfortunately, unavoidable. However, there are steps which Britons can take to remain in control of their finances and reduce stress. From talking over their problems, to conducting audits and making use of technology, there are plenty of ways in which people can get the support they need. In doing so, they can set themselves on a path towards a healthier financial future.
Chieu Cao is CEO of Mintago. Mintago is an FCA regulated financial wellbeing company that helps find lost pensions quickly and provides financial planning tools, supported by over 1,000 pieces of informative content and tips about various aspects of their personal finances for its users. Mintago also helps businesses and employees save money via HMRC’s salary sacrifice pension scheme. Mintago provides a salary sacrifice pension hassle-free implementation program, which creates direct savings on monthly National Insurance payments, with a platform that simplifies managing employee pension contributions.