Financial stress is one of the most significant sources of anxiety and discomfort in the modern world. It’s not just about having enough money to meet our needs; it’s also about managing that money effectively and making informed decisions.
This is where the concept of financial fitness comes in. Like physical fitness, financial fitness is not a destination but a journey, a continuous process that requires discipline, knowledge and an understanding of your financial goals.
Getting your finances in shape could be a crucial stepping-stone toward better overall wellbeing. Financial health can have a profound impact on our mental and emotional state.
Given the established correlation between finances and wellbeing, enhancing your financial wellbeing could potentially improve your overall life satisfaction and happiness[1]. Receiving professional financial advice can assist in various aspects of your financial life, but four elements mainly define personal financial wellbeing.
The initial step towards financial wellbeing is gaining control over your finances. This involves understanding your income and expenses and solid budgeting and savings plans. A financial adviser can help you scrutinise your bank statements, enabling you to comprehend your monthly expenditure better and identify potential areas for cutting costs and increasing savings. They can also provide advice on managing any existing debts. Gaining control of your daily finances can enhance your overall financial security.
The second component of financial wellbeing relates to future financial security. Regular savings are essential, but are you prepared for a financial emergency? If you still need to set up an emergency fund, now is the time to do so. Having approximately six months’ worth of necessary expenses in an easily accessible savings account may cover unforeseen home repairs or a period of unemployment.
There are other financial emergencies that savings alone may not cover. Severe illness or death can significantly impact your household finances and jeopardise your family’s future plans. Protection products such as life insurance, critical illness and income protection can provide crucial financial support for your loved ones in case of unfortunate events. Given the vast differences in protection products, seeking professional financial advice tailored to your needs is essential.
A high sense of financial wellbeing is often associated with being on track to achieve your goals. Whether saving for your children’s education, a comfortable retirement or leaving a legacy for future generations, receiving professional financial advice can help assess if you’re on the right track and suggest ways to bridge any gaps. Advice can also guide you to save and invest tax-efficiently, for instance, through Individual Savings Accounts (ISAs) and pensions, ensuring more of your money contributes towards your future.
The final aspect of financial wellbeing is having the flexibility to make choices that allow you to enjoy life fully. Receiving professional financial advice can help you envisage your future and project how long your money might last and assist you in ‘rehearsing your future’ by examining and stress-testing the consequences of your current decisions. Understanding the impact of your choices provides clarity and confidence about your finances, both now and in the future.
Dealing with financial worries alone can be challenging. We can help devise a financial roadmap outlining your current situation, future aspirations and the path to achieving them. Enjoy the present, knowing you’re making sound financial decisions. To discuss any of the issues raised in this article, please contact us.
Source data: [1] https://maps.org.uk/en/our-work/uk-strategy-for-financial-wellbeing/what-is-financial-wellbeing
The tax treatment is dependent on individual circumstances and may be subject to change in future. Estate planning is not regulated by the financial conduct authority. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.
Personal circumstances differ and not all of this information is applicable to every client and/or their business, this information is general in nature and should not be relied upon without seeking specific professional financial advice.
The Financial Conduct Authority (FCA) does not regulate tax advice, estate planning, trusts or will writing.
The content in this article is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice.
Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.
Thresholds, percentage rates and tax legislation may change in subsequent finance acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.
Pareto Financial Planning Limited is authorised and regulated by the Financial Conduct Authority (FCA).
© 2024 Paretofp. Pareto Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. Pareto Financial Planning Ltd is registered in England and Wales No. 06582775. Registered Office The Old Schoolhouse, 5-7 Byrom Street, Manchester M3 4PF. All rights reserved.
