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What is Financial Wellbeing and Why is it Important?

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Throughout the month of February this year, universities across the UK participated in National Student Money Week – the largest national money awareness week for students. Their focus this year was ‘expecting the unexpected,’ which could not have been more needed in such uncertain times.

Off the back of this, and in anticipation of Blackbullion CEO Vivi Friedgut’s forthcoming Trigger release, Stay Financially Healthy While you Study, we spoke to their team about money management and financial wellbeing. We hope it will help everyone – students and non-students alike – to improve their relationship with money.

1. How did National Student Money Week come about?

It was launched by the National Association of Student Money Advisers (NASMA) ten years ago. This year, we focused on expecting the unexpected, which feels right given the impact that the pandemic has had on students. Blackbullion has supported this initiative for three years now. We share NASMA’s mission to help everyone learn how to withstand any financial situation that life throws at them.

2. Is there a direct link between money management and mental health?

Financial wellbeing is critical to overall health. We call it the “tripod of wellbeing,” which places financial health firmly alongside mental and physical health in terms of an holistic sense of wellbeing.

Simply put, financial wellbeing is about a person’s ability to control their finances, rather than being controlled by them.

Recent research by Blackbullion found that 75% of students surveyed were worried about finances, with 67% of those saying financial anxiety negatively impacts on their mental health. Over half of students said financial worries regularly trigger anxiety, with 63% saying it triggers stress.  Other affected areas included optimism about the future (54%), motivation or productivity (47%) and the ability to focus and study (46%). Sleep (45%) and confidence (42%) were also areas of mental health that were suffering as a result of money worries – so it’s acutely clear to us how deep this cuts.

3. What is financial anxiety, and what can be done about it?

Financial anxiety is when an individual has a poor relationship with money. Often, they’re unable to stop worrying about finances – even when they have sufficient resources – and they might be easily triggered by issues relating to finance. This can seep into other areas of a person’s life, affecting personal relationships or work performance.

4. And what does it mean to be financially healthy?

Simply put, financial wellbeing is about a person’s ability to control their finances, rather than being controlled by them. You set your finances in such a way that your money works for you, regardless of circumstances. Being financially resilient is 100% at the core of this – looking after your money rather than getting into difficulty over it. It’s so important because money is at the core of much of our ability to care for ourselves – and money worries can be debilitating.

5. Is there a link between financial health and success?

I believe so. I think great health – mental, physical and financial – is success.

Defining any kind of success depends on setting expectations. How do you define your success? What you earn and how you utilise, protect and grow your money, will all play into your objectives and goals… and ultimately, into your feelings of financial success.

6. In her book, Vivi talks about the ‘unique stress of money’. Can you explain what she means?

Money problems don’t just cause you to lose sleep at night and to count pennies. They can create a feeling of hopelessness, which in turn creates less than optimal financial outcomes, which in turn results in more stress. It becomes a vicious cycle.

And money stress can be toxic to your wellbeing even when there isn’t actually a financial problem. Economic instability, work worries, ripples of financial insecurity… these can drive up stress in anticipation of a potential problem. It’s why money stress can so easily become chronic, and why it’s been such a major mental health issue this year for so many people.

7. How can an individual recognise and change their unhealthy attitudes towards money?

Education. Education. Education. Get more involved in – and aware of – your money. Engage with your finances regularly. Read more, learn more… Treat your money the way you would any muscle – one that needs regular exercise and check-ups.

There’s so much help out there, too. Yes, turn to friends and family for advice – but don’t forget about the professionals and charities dedicated to helping with this.

8. What negative behaviours can come about as a result of poor money management?

A red flag for me is tech-enabled spending – anything from excess online shopping through to gambling is a real risk. These behaviours can be compounded by the loneliness, isolation and poor self-esteem that can come with financial anxiety (and with living through a pandemic!).

It’s also the longterm decisions that can affect future outcomes. Our research showed that nearly half of students (48%) have considered dropping out of higher education or deferring for a year, due to the financial fall-out of COVID-19.

9. Can you list your five top tips for future-proofing financial wellbeing?

1. Start budgeting – map out your income and expenses and make sure it all balances.

2. Set up an emergency fund. This should be between 3-6 months of total expenses.

3. Build a support network to share concerns and costs like (using students as an example):  study materials, meals and transport.

4. Look into getting insurance to manage risk and further expenses.

5. Know where to go for help – whether it’s Blackbullion’s funding page, additional government support or friends/family – you’re not alone.

10. And finally, what help is available for anyone who’s struggling with money worries or debt?

Of course I’d recommend Blackbullion or NASMA! But student support staff on campus are always there to support students. and organisations like Citizens Advice are amazing too.

Editor’s note:

For non-students, there are a number of charities and organisations that specialise in helping with money management.

If you’re based in the UK, you can contact Citizens Advice, Christians Against Poverty and Step Change Debt Charity, among others.

About the Author

Former wealth manager Vivi Friedgut saw first-hand how financial knowledge impacts positive life outcomes. As founder and CEO of Blackbullion, the award winning startup transforming next generation finances through financial education, Vivi’s on a mission to make sure everyone has access to financial wellbeing – driving inclusion, diversity and wellbeing.

A champion for the startup community, Vivi is an active media commentator and speaks passionately on financial literacy, entrepreneurship, resilience and the power of innovation.

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