Ways to look after your financial wellbeing.
Many see money management as a practical necessity, but in reality your financial situation has a huge impact on your mental and emotional wellbeing. Financial coach and author Clare Seal talks about how to find the connection between how you spend and how you feel.
Published:10 Jan 2023
1. Understand your money history
As a coach I see lots of people get stuck in patterns of harmful money behaviour, not able to understand why they can’t break a cycle of debt, overspending or financial anxiety. I even experienced it myself for many years and it can be incredibly frustrating.
The first step in changing your relationship with money is to understand why you feel the way you do, and how your habits around cash formed. Our money memories often stem back to childhood, with our parents’ attitude towards spending and saving playing a huge role in how we grow to manage our own money. We might have gaps in our financial education or deep-rooted beliefs that limit our ability to have a healthy relationship with money.
Try this: Writing down your ‘money story’ - the role money has played in your life so far - can be hugely helpful and lead to conclusions you might not have considered before.
You might be able to find the root of some of the behaviour that you want to change. Understanding these things is often the first step to changing them. You might remember an early experience that gave you negative feelings about money, or maybe your parents modelled behaviour that you went on to copy.
2. Find gaps in your knowledge and fill them in
It’s hard to feel confident in managing your finances if you don’t understand how the world of money works. Schools often don’t teach things like interest rates, pensions, investing and mortgages, leaving many of us to work it out as we go through life.
Try this: If you don’t understand certain financial terms - which many of us don’t - a Banking jargon buster, is a good place to start. If you’re looking for general information from benefits to savings, the government’s impartial MoneyHelper service is full of useful information.
3. Focus on habits and behaviour change
It can be really tempting to make huge, sweeping changes without laying the groundwork, especially if you worry about money or regret past poor financial decisions. But that can have a similar effect to yo-yo dieting: you get stuck in a cycle of depriving yourself and then over-indulging, with the result being that no meaningful change happens.
Instead, focus on small, incremental habit changes as recommended by bestselling author James Clear. His principles for eliminating undesirable habits and introducing positive ones apply beautifully to money management: make bad habits invisible, unattractive, difficult and unsatisfying, and good habits obvious, attractive, easy and satisfying.
Try this: Small, positive habits to introduce could include checking your bank balance each morning or setting up a standing order to save an affordable amount each month. You could look to break a negative habit like impulse purchases by setting a spending limit for contactless payments.
4. Get to grips with your spending triggers
Ever felt frustrated that your budget works on paper but you somehow still end up short at the end of each month? It may be that you’re not completely in control of your spending behaviour. This can lead to money worries and have a negative impact on your financial wellbeing. Aim to spend mindfully – with intention and attention to why and how you’re parting with your cash – at least 80% of the time.
Try this: Print off a couple of bank statements then go through them with a highlighter to see what you are spending money on. Then look at purchases you regret, weren’t worth it, or that you just don’t remember, and try to understand what triggered them.
If you know you tend to overspend when you’re bored, tired, stressed or even excited, find other ways to cope with those feelings. Talk to a friend, go for a walk or have a bath rather than turning to shopping.
5. Set goals and make a plan for the future
It’s hard to feel a full sense of financial wellbeing without considering your future financial security - especially now we understand how quickly economic circumstances can change and how acutely this can affect us.
You might want to save for a house deposit, start a family, go travelling or get ready for retirement. Everyone’s financial goals are different - but whatever your mission, it can help to break the bigger goal down into a few smaller steps, creating a plan to follow so you feel like you’re making progress.
Try this: Set two or three financial goals that are linked to the life you want, then set reminders to review them and monitor your progress every month or so.
Facts and figures were checked for accuracy at the time of publication and curated using a range of sources. While we hope that you find this page useful, please be aware that this is information only and not financial advice.