A New Entry into the Financial Lexicon: ‘Financial Wellbeing’

By: Ruth Sturkey
Client Director – London
Paradigm Norton

I confess, when I started to write this article, I wondered whether ‘financial wellbeing’ was just some new buzz phrase or a phrase worth using.

What is wellbeing?

I resisted the urge to seek out dictionary definitions of ‘wellbeing’ and instead started to think what the term might mean to me both in my work as a Financial Planner and in my life generally. Wellbeing to me means finding understanding and balance across the key areas of life.  Those areas being money (to include shelter), relationships (work, friendships and community), health (to include mental health, exercise, fitness and sleep) and purpose (which includes values, creativity and learning). An imbalance causes unease in some shape or form, which, if not identified, can lead to unhappiness, negative behaviours and even addictions. 

Money is a key part of an individual’s wellbeing.  We know that happiness is not derived from money alone as proven by a study by Daniel Kahneman and Angus Deaton from 2010. https://www.pnas.org/content/107/38/16489 The study provides evidence that income beyond a certain level (circa £75,000 a year) does not bring happiness (or emotional wellbeing, which is one of the definitions of happiness).  I too am well-rehearsed in the argument that money might not bring happiness, but it is much easier to be miserable when surrounded by comfort than in poverty (or as the Kahneman and Deaton study explains, money may provide ‘a more positive evaluation of life’, a subtle but different feeling to emotional wellbeing). 

What is it that we do as Financial Planners to cause financial (and general) wellbeing?

So, what is it that we do as Financial Planners to enhance wellbeing?  It turns out we facilitate a whole heap of things:

  • We cause people to stop and think about what they want from life by asking open and thought-provoking questions.  Rarely are people, caught up in the hurly burly of life, asked these questions. Even less often do they have a space dedicated to stop and think about it.
  • We encourage people to notice and understand where they spend their money and the choices they make.  How unconsciously do we just spend and wonder why we never had enough left at the end of the month? 
  • We help people identify what they have coming in and going out (some would call it budgeting!) and help them live within their means enabling a greater sense of control. 
  • We help people develop good money habits with savings and investments being regular monthly utilities, not an afterthought if there happens to be money left at the end of the month. Savings and investment strategies help people meet short, medium and long-term goals whether that be buying a home, going on a long dreamt about trip, putting a child through university or helping them onto the housing ladder, setting up a business or enabling a happy and healthy retirement. All of which bring differing degrees or satisfaction or happiness.
  • We identify the risks people face both personally or as a family, or a business, in the event of ill health or death and put protection plans in place to help mitigate the impact of life’s inevitable challenges thereby enhancing peace of mind and providing security.
  • We make sure that people have Wills drafted to ensure their wishes are carried out on death to prevent family feuds of misunderstandings.
  • We make sure people have Lasting Powers of Attorneys in place to make sure they and their loved ones can be looked after in the event of severe illness or accident.
  • We are sounding boards allowing people to express their fears, test out new ideas, get a candid view on the latest hot shot savings scheme to help them make decisions and stop expensive mistakes.
  • We educate people to understand how savings and investments work, to the level and in a way that is understandable for them.
  • We help people work out ‘enough’, whatever that means to them.

Wow. On balance, the role we as Financial Planners have in enabling our client’s financial wellbeing, has significant positive knock on effects into many areas of their general wellbeing.  Imagine the impact this might have on society as a whole? I would argue that it is incumbent on us to get our financial planning and financial wellbeing message out to as many of our colleagues and the wider public as we possibly can.  Let’s do it now.


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