Financial wellbeing is key for social and economic stability. So, let’s have a look at what financial wellbeing really is and why it’s so important.
The Money and Pensions Service’s (MaPS) Definition
“financial wellbeing is about feeling secure and in control. It’s about making the most of your money from day to day, dealing with the unexpected, and being on track for a healthy financial future. In short: financially resilient, confident and empowered”
So there you have it – that’s what financial wellbeing is all about; it’s about having that confidence and ability to deal with your own personal finances.
The MaPS examines the UK’s general financial wellness by focussing on the following key areas:
- Receiving a meaningful financial education
- Saving regularly
- Using credit for everyday essentials
- Accessing debt advice
- Planning for and in later life
Financial Education Vital to Financial Wellbeing
As you can see from the MaPS’s list, a meaningful financial education is one of the areas that is vital to experiencing a state of financial wellbeing, and that is what we are all about at Red Star Education. We should really emphasise the word ‘meaningful’ here as well, because whilst financial education has technically been part of the national curriculum since 2014, it continues to lack meaning.
The financial education currently provided is often not delivered at all, or is taught by maths teachers who, whilst qualified in mathematics, are not financial experts… mathematics is not finance – they are not synonymous terms.
Financial Wellbeing Benefits Businesses and the Economy
In 2018, 11% of UK employees reported that they had experienced reduced productivity at some point over the last 3 years due to their financial situation.
Therefore, employees having a healthy relationship and understanding of their finances can be very beneficial to workplace productivity.
The MaPS also notes that customers are less likely to fall behind on bills or experience missed payments, which can lead to a steadier cash flow for businesses.
Financial Wellbeing is Important for Physical and Mental Health
According to the Government:
“Life expectancy is one of the main measures of health inequality and is closely related to socio-economic status. This systematic relationship between deprivation and life expectancy is known as the social gradient of health”
Therefore, financial wellbeing , or lack thereof, can have significant effects on individuals’ physical health. In fact, those living in deprived areas live 8 years less on average than those in affluent areas.
Moreover, our relationship with our finances can have enormous effects on our mental health. 86% of respondents to a Money and Mental Health survey of almost 5,500 people with mental health problems, reported that their financial situation had worsened these mental health problems. We speak about how your finances can impact your mental health, and on the flip-side of this, how your mental health can impact your finances, on past blogs.