You might be thinking that personal finance sounds pretty self explanatory, it’s obviously about knowing your personal money situation right. However, there’s a bit more to it, it’s not just about knowing your money, it’s about understanding how much you earn, what your monthly expenses are, and how to budget within your income to achieve your financial goals. Does not sound so simple now does it. In fact, it sounds like it can be quite stressful and somewhat overwhelming.
That brings me onto wellbeing, which is defined as the state of being comfortable, healthy, and happy. Now what about financial wellbeing, have you ever questioned how do your finances and wellbeing tie together?
This article aims to create awareness around the correlation between your finances and your wellbeing. Financial wellbeing is about your behaviours, spending, borrowing and saving habits and how they make you feel. We’ll be exploring what this is further, and how you can better understand yours.
Money and mental health
People with mental health problems are three and a half times as likely to be in problem debt
Money issues often cause trouble sleeping and concentrating, the knock-on effects of these can vary
72% of respondents to Money and Mental Health’s survey said that their mental health problems had made their financial situation worse
They may find themselves spending an increasing amount of time worrying about bills and visits from bailiffs
Cause or effect?
Financial wellbeing impacts people across ALL pay levels – more money does not mean better financial wellbeing! Regardless of how high your income is, if you have high outgoings, there is an unbalance that leads to money struggles. These struggles then cause stress.
What do we want to do when we are stressed? Spend money!
We spend on things that make us feel good, but we’re spending money we should not be spending. It’s a vicious cycle that is easy to fall into, but it does also mean that if you work on one, the other will improve too!
Money personality
Money plays a key role in everybody’s life and ways that we act around money could have major influences on our futures and the way we live our lives. Money personalities reflect your attitude and behaviours around spending and saving, from your behaviour with other people’s money to the ways you go about getting your own money.
There are 6 personality types: (Olivia Mellan, 1994)
The Amasser
You tend to equate money with self-worth and power, so a lack of money may lead to feelings of failure and even depression.
The Avoider
You may feel incompetent or overwhelmed when faced with the tasks of your money life.
The Hoarder
You most likely have a hard time spending money on yourself and your loved ones for luxury items or even practical gifts.
The Money Monk
You would probably avoid investing your money, for fear that it might grow and make you even wealthier.
The spender
You enjoy using your money to buy yourself goods and services for your immediate pleasure. You probably get satisfaction from spending money on gifts for others.
Money Mastery
You make logical decisions. You’ve learned to take the time and not let your emotions run away with yourself.
Take the quiz for yourself and see what your money personality type is. If we understand how the financial environment affects us, we can better control our cash instead of being controlled by it. By recognising unhealthy patterns, such as addictive consumption or problem debt, and the underlying issues that may be triggering problem behaviour, you can work on your mindset towards money.
Tips to achieve a peace of mind:
Speak to work and see if they can assist in any way
Remember that self worth is not connected to your net worth
Take a money personality quiz to educate yourself and understand your financial habits
Go with your plan, not your mood
Seek out professional financial guidance service, such as Crooks Investments
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