Indeed, for most of us, money and finance are probably inextricably linked with our relationships, where we’re able to live, and how we get to spend our time. While money doesn’t necessarily buy happiness, we do need it for stability and security. It’s hard to feel relaxed and content if we’re worrying about money, but money worries seem to be a persistent problem for lots of people. Research from the Mental Health Foundation found that nearly a third of UK adults they surveyed reported feeling anxious about being able to pay the bills.
We’ve covered five ways to try and boost your financial wellbeing. We’ll give you some practical tips and point to useful organisations which can provide free and impartial advice, but keep in mind that this article is not advice. You might want to consider paying for financial advice, if you’re not sure or have complex money issues.
1. Set up financial goals and a plan to get there
Setting goals can be scary, but it can also be a powerful motivator. Rather than trying to ignore your money worries, try turning them into financial goals.
You should prioritise goals that help boost your financial resilience first. For example, if you’ve got any high-interest debt (such as credit cards or payday loans), your number one goal should usually be to come up with a plan to ensure these are manageable – and start working towards paying them off. It’s also a good idea to make sure you’ve got enough saved up for emergencies, so this should be pretty high on your list of goals. We cover these in more detail below.
If these are already in place, your goals might include saving up for something specific, such as a holiday, a car, or a house deposit. The simplest way to set a goal like this is to work out how much money you need and when you would ideally want the money by. The next step is to calculate how much you would need to save each month to reach that goal. For example, if you want to save up £10,000 in five years towards a house deposit, you’d need to save around £170 a month.
2. Look at your budget and see where you could save money
In its simplest form, budgeting just means comparing how much money you’ve got coming in each month to how much usually goes out. You can do so with a budgeting tool (like the Money Helper Budget Planner), a spreadsheet, or even a pen and paper. These days, there are lots of Apps that automatically analyse your spending and do the calculations for you. Check out this article from Which? on best budgeting apps in 2024.
Then it’s time to dig deeper into your spending to see where you could save money. Have a look at your bills and regular payments to service providers to see if you could save money by paying a different way or moving to a different contract or tariff. If your contract has expired already, check with your supplier to see if a better option is available, and consider shopping around - you may be able to find a better deal for new customers. Price comparison websites can help with this, but you can also check with the company directly, through their website or by talking to someone.
Finally, look at non-essential spending on things like new clothes, take aways and visits to coffee shops. You might want to set yourself a budget for how much you should be spending on these, so you’re not overspending each month. Plus, you might find you enjoy these things more when you’re carefully choosing them and appreciate their value.
Getting rid of unused subscriptions to things like music, podcasts and streaming services is another common way to save money. But rather than going without, you could consider free alternatives. For example, local libraries often have Apps or websites where you can download ebooks for free. Or you might want to consider switching to free streaming subscriptions and embrace the adverts as an opportunity to stretch your legs and pop the kettle on.
3. Make a plan to manage and pay off any outstanding debt
Debt isn’t necessarily a bad thing if it’s manageable or if it’s an investment in yourself. For example, student loans and mortgages are common forms of long-term debt which may contribute to a better financial situation in the future.
But if you have high-interest debt, then it might actually be costing you more in the long term in charges. Plus, by continually going into debt, especially to cover things that you could live without or to cover other forms of debt, you might fall into a debt spiral that could threaten your credit rating and financial stability.
The first step is to work out how much debt you owe, and work out a plan for paying it off. It usually makes sense to try and pay off expensive debts (like credit or store cards, payday loans and overdrafts) first. But you should try to keep up with the minimum repayments across all your debt to avoid going into arrears. Pay close attention to any early repayment fees, as well as the interest rates, to make an informed decision. You could even consider transferring or consolidating your debt to a new provider if they offer lower charges and better terms.
If you’re struggling with debt or want support, make sure you reach out to the right people for help. If you’re a Triodos customer, please contact us to let us know about your situation so that we can discuss anything we might be able to do to help you. It’s also worth looking at free, impartial debt advice services such as MoneyHelper and National Debtline.
4. Set aside some cash for the unexpected
A 2022 survey from the Money and Pensions Advice Service found that one in six adults in the UK have no savings, and a quarter of UK adults have less than £1,000 put away. But if you lose your job or your bills increase suddenly, you could find that your money starts to run out very quickly. Building an easily accessible cash pot set aside for emergences is a great way to boost your financial resilience – and therefore your financial wellbeing.
Experts recommend saving enough to cover three to six months of living expenses (such as money for mortgage/rent, bills, food, travel, and any other essential monthly outgoings). For the average UK household in 2023, this comes to around £2,700 each month, so an emergency fund would be between £8,100 and £16,200. Retirees who might not be able to rebuild their emergency funds as easily may need closer to one to two years’ worth of outgoings in cash.
This might seem like a lot of money to have saved up and set aside, but it could provide you with a vital buffer and give you more control and flexibility if something does happen. For example, if you lose your job, you would have more time to find a suitable one, rather than struggling for money or needing to take the first one offered. Or, if you get a large unexpected expense, you could opt to pay it off in one go rather than having to pay higher-interest instalments.
5. Make your money work harder
Even if you’ve managed to get cash set aside, you might still worry about your financial future. It’s hardly surprising, it’s harder than ever to save up cash, and daily living costs are getting even more expensive, meaning your money might not go as far in years to come.
That’s why it’s important to try get your savings to work hard for you. One way of doing this is by putting some of the cash that you don’t need for daily or monthly spending into a savings account where it can earn interest.
There are lots of different savings accounts with different rules and rates of interest. Any cash set aside for emergencies (or any planned expenses on the horizon) should be put into an instant-access account where you can get at it. You might consider putting additional savings that you don’t need access to into a fixed-interest savings account for a potentially higher-rate of interest. But keep in mind that you might not be able to access this cash until it matures. Make sure you understand and read the terms of any financial product before you take it out.
You might also consider putting some money into a Cash ISA when it can be sheltered from tax – meaning you get to keep all of the interest you earn. Keep in mind that ISA and tax rules can change, and any benefits will depend on your circumstances.