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Mental health has always been an important topic, yet the lockdown in 2020 has brought it more into the public discourse. Certainly there has been much in the news which makes depressing reading including the spread of COVID-19, the Chinese crackdown on Hong Kong and protests over the death of George Floyd in the U.S. At this crucial time, it’s so important that we all strive to look after each other and ourselves.
Here at Cedar House, one of the ways we believe we can make a difference is through financial planning – which has been shown to have a positive impact upon people’s mental health. When you feel more in control of your money and sense progress towards your financial goals, it often brings much greater satisfaction and peace of mind. Below, our financial advisers outline the positive ways a financial plan could help your wellbeing in 2020, and how to get started. We hope you find value in this content and invite you to contact our financial advice team here at Cedar House for more information, or to access personalised advice:
020 8366 4400 or firstname.lastname@example.org
Financial stability & mental health
March 2020 was an important moment in the new UK government as it announced a range of plans to protect the economy in the wake of COVID-19, including the Job Retention Scheme. Whilst many of these measures were broadly welcomed, they haven’t been enough to eradicate widespread public anxiety about their financial situation.
One study in May 2020 found that over 1/3rd of British adults were concerned about redundancy in the wake of the lockdown. This is certainly an understandable fear given that the University of Essex has predicted as many as 6.5m job losses could be the eventual result. This is all on top of the money worries people had already before the pandemic hit, with 18m people in the reporting regular financial anxiety in late 2019 and 9.5m people reporting mental health problems due to money worries.
Clearly, there is an opportunity for financial planners to have an immensely positive impact on the UK’s mental health if they are able to help people reduce their money anxieties. In other words, one’s financial health and mental health are intricately connected. If greater stability can be brought to the former – e.g. through cashflow planning and debt mitigation/eradication – then in many cases improvements to the latter can result. Certainly, here at Cedar House many of our clients have reported fewer worries about money once they have worked through a financial plan with an adviser. Common feedback includes:
“I feel so much more at ease knowing where all our finances are, and that it is all organised.”
“It’s reassuring to know that, should the worst happen, there are measures in place to protect my family’s finances.”
Practical measures to help mental health
You may or may not be in the position to start a conversation with a financial planner right now. That’s completely fine. Regardless, there are positive steps that every person can take on their own regarding their wealth and finances which could help alleviate money worries. Here are some ideas to consider from our financial advisers here at Cedar House:
- Review your buffer. Should you or your significant other lose your job, do you have at least 3 months’ worth of living expenses in any easy-access savings account to fall back on? This can be a crucial safety net for your household which can help reduce stress and anxiety about money. If you lose work, you think, at least there’s a buffer to keep you afloat whilst you find new options for paid work.
- Review the budget. It’s one of the most basic but important steps that you can take to address money worries. Taking time every so often to consider your outgoings is key to help reduce waste (e.g. unused online subscriptions) and open up more “breathing space” in your monthly budget.
- Review income streams. Many people are reliant on a single source of income for their household – i.e. a full-time job. This is often the only realistic option for many people, but for others there could be scope to develop an additional source of income on the side. Perhaps you could pick up some freelance work in the evenings or on the weekends, for instance? Having an additional income stream can help alleviate money worries, since not all of your income would necessarily disappear if you lost your job.
- Review protection. If you or your spouse suddenly died or could no longer work due to serious injury or ill health, what would happen to the household finances? This is where protection policies such as life insurance, income protection and critical illness cover can provide an extra, crucial safety net for your finances should disaster strike. Here, it can be helpful to seek the counsel of an experienced financial adviser to ensure you survey a wide range of good options on the market which are best suited to your needs.
If you would like to discuss your financial plan with a member of our team, then get in touch today to arrange a free consultation:
020 8366 4400 or email@example.com.