Poor mental health can affect every area of your life, including your financial wellbeing.
It can impact your ability to work, make key financial decisions, and stay on top of your money. At the same time, financial worries can put more pressure on you when you are already struggling, which can create a negative cycle.
Research by Money and Mental Health found that 86% of people with experience of mental health problems said their financial situation had made their mental health problems worse, and 72% said their mental health problems had made their financial situation worse.
While fixing your financial situation may not be the remedy for all mental health struggles, it can undoubtedly give you one less thing to worry about and weigh on your mind.
So, with World Mental Health Day approaching on 10 October, read on to discover four ways financial planning can support your mental health.
1. Breaking overwhelming goals into manageable steps
When you are struggling with your mental health, the future can sometimes feel difficult to imagine.
Setting goals, no matter how small, can be a good way to get out of this. The problem is, even after you have set goals, you may feel overwhelmed about how to achieve them.
When it comes to your finances, the goals could be short-term, such as building an emergency fund or paying off a debt. They could also be something further away, such as buying a home or saving enough to retire comfortably.
Feeling incapable of achieving such targets can take a toll on your mental health.
Whatever your goals are, it’s important to acknowledge that few are achievable in one fell swoop. In reality, most are reached through small, steady steps over time.
A financial planner can help you break down your goals into a series of achievable steps, rather than trying to tackle everything at once and leaving you feeling overwhelmed.
Breaking down a complicated financial situation into smaller stages can make it easier to see what you need to do to help ensure your goals remain achievable. It can also make your progress easier to recognise as you work towards your longer-term goal, potentially giving you a greater sense of achievement and encouragement as you progress towards your future.
2. Helping you feel more in control of your money
Financial uncertainty can be a significant source of stress. Not knowing whether your savings are on track or what to do about a particular decision can leave you feeling powerless.
While it’s normal to experience periods of uncertainty, especially amid a challenging economic environment, financial planning can give you a clearer picture of your standing and the options available to you. This can have an empowering effect that enables you to feel more in control of the direction of your finances and wider life.
Research from Royal London found that financial planning clients said the top two benefits of working with a professional were:
- Feeling greater confidence in their finances
- Being in control of their financial situation
Having a better understanding of your finances can make it easier to approach decisions with confidence, rather than feeling as though you are making them without knowing the full picture.
Financial planning can also help you develop your understanding of topics you may have once found intimidating. As your knowledge grows, so too may your confidence in dealing with financial decisions independently.
3. Taking some of the emotion out of difficult decisions
Fear, stress, and uncertainty can all influence the way you make financial decisions, especially when your emotions are already running high.
For example, if you are anxious about losing money, you might be tempted to quickly sell off some investments at a loss. Or if you are worried about what an upcoming Budget might include, you may hurry an asset sale or withdraw from your pension in preparation for a tax change that never materialises.
These decisions are unlikely to be made with your long-term interests at heart and may instead be rushed due to psychological pressure from external factors.
A financial planner can be key here, as they can provide crucial perspective at challenging moments. By having a clear understanding of both your circumstances and the wider market, they can help ensure you make decisions based on long-term trends and in service of your goals, rather than driven by emotion.
4. Building a financial plan around the life you want
A good financial plan should reflect the life you actually want to lead, and having a clear and positive vision of your future can be a key factor in supporting your long-term mental health.
That means considering the things that matter the most to you and ensuring they are provided for. This might include your family, career ambitions, or retirement goals.
This approach can help you to think about the relationship between your finances, your life, and your wider wellbeing. It can give you confidence and encouragement that you are on track to build towards a life you can feel proud of and hopeful for.
Get in touch
Financial wellbeing and mental health are often more closely connected than we realise. If you feel overwhelmed by your finances, having a clear plan and someone to help you make difficult decisions could make managing your money feel considerably more achievable.
To speak to a financial planner, get in touch.
Email us at hello@vwmwealth.com or call us on 0141 229 4004.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
