A recent Scottish Widows report suggests that financial wellbeing has declined since the country reopened post-lockdown.

The company’s latest UK Household Finance Index found that household perceptions of financial wellbeing dipped by 0.7 for Q3, compared to the previous quarter, down to 44.0 on the index. The figure does, though, remain well above the levels seen at the outset of the pandemic, when job security was a concern for many, and incomes were low.

Source: Scottish Widows UK Household Finance Index

While the end of lockdown led to a rise in wellbeing, this boost has proven short-lived. Low interest rates and high inflation have increased pessimism within UK households – the index stood at 49.2 in Q3, down 1.1 from the previous quarter. Those over the age of 35 registered as the most pessimistic.

So, what is financial wellbeing? How can you improve yours? And what can Boolers do to help you feel more optimistic about your financial future?

Keep reading to find out.

Financial wellbeing is about more than the money you have now

Financial wellbeing begins with understanding your financial position and the things that make you happy.

Using our knowledge of these things as building blocks means that the long-term plan we put in place for you has its foundations in both your financial and non-financial goals. Our plans use your desires now to help build your dream future.

Improving your financial wellbeing could be as simple as rethinking what your building blocks are. Have your goals changed? What makes you happy? What do you want your life to look like?

Building a long-term plan means getting to know you and the answers to these questions.

Finding out about you

When we build a financial plan, we will begin by understanding you. The questions we ask are specifically designed to get you thinking about the answers to some potentially difficult, but very important, questions. These include:

• What makes you happy now?
• What do you expect to make you happy in later life?
• Do you have a long-term plan to make your retirement dreams a reality?

Understanding your current aspirations and attitudes toward money, helps us to understand what wellbeing looks like for you in the present, and what it might look like in the future. Only once we have built this picture, will we look at your finances.

Finding out about your money

There are several steps to financial security. We can help you to:

• Understand your cashflow by modelling your incomings and outgoings
• Help you to build an emergency fund and manage debt
• Build a long-term plan that provides financial security in the present while working towards your future retirement goals.

Financial security can lead to financial wellbeing, whatever happens in the outside world

While the coronavirus pandemic caused financial hardship for many, millions managed to accrue “accidental savings”. Some savers even used lockdowns to pay off debt.

Unbiased reports that 85% of UK adults were spending less in lockdown, leaving the average Brit (who was still in receipt of their full pay) better off by £617 a month. For many, this was largely due to the limited opportunities for spending. These limitations included savings on petrol while under stay-at-home rules, and an inability to eat meals out, be entertained at the theatre or go on holiday, for example.

While the end of lockdown has seen a sharp rise in the cost of living, keeping sight of the changes and the savings you were able to make in lockdown could lead to a real boost for your long-term financial security.

Cashflow planning can help you to understand where your lockdown savings were made, and where they could be made again.

We can help you decide how this money could be used to help you reach your long-term goals. You might:

• Build an emergency fund to ensure you and your family are covered should the unexpected strike again in the future
• Clear your high-interest debt so that more of your income can go towards securing your dream future
• Pay your future self through increased pension contributions.

The importance of a long-term plan

While financial optimism and wellbeing are falling for some, the pandemic has provided several financial lessons worth remembering.

The importance of budgeting, the benefit of having a long-term plan to focus on, and the need for patience when the unexpected throws that plan off course in the short term, are all useful lessons to take into next year.

At Boolers, we look to understand your financial and emotional circumstances and goals when we build a plan for you. This helps to ensure we can provide you with a feeling of control, confidence in your future, and a sense of financial wellbeing.

Get in touch

If you would like to discuss your retirement options or any aspect of your long-term financial goals, please contact us today.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.