10 year plan to improve the UK's financial wellbeing

Laura Miller

by , Freelance financial journalist

17 Feb 2020 /  

17
Feb 2020

A stack of 3 yellow blocks with a smiley face on infront of a blue background

If you feel a bit iffy, you go to your doctor. They ask about your diet, exercise, aches and pains. Any medication you’re on and if you do anything ruinous like drink too much or smoke. This checklist helps them keep an eye on your health. So why are we so reluctant to do this to our finances?

What is financial wellbeing?

Financial wellbeing is a probably a phrase you’ve have heard a lot. It’s about having a good, healthy relationship with your money. It’s a sense of security that you have enough, and can manage both your short and long term needs, from paying the gas bill to saving for a pension.

Like the chat with your doctor, this kind of nourishing approach to money matters needs honesty, openness and, sometimes, admitting we’ve got a bit off track.

Why is a financial wellbeing plan needed?

We’re quite bad at talking about money. More than a quarter of women would rather tell their partner they were sexually unsatisfied, according to research, than discuss their financial situation.

So to kickstart a national conversation, the government-backed Money and Pension Service (MaPS) has launched a 10 year plan to improve the UK’s financial wellbeing.

What are the financial wellbeing goals?

The Money and Pensions Service has five goals to achieve by 2030; financially educate seven million children to instil good habits early; help two million poorer people save; lower by 2 million the number of people using credit to pay bills; provide debt advice for two million more; and encourage another five million to plan for their retirement.

Maps’ plan is interconnected and ambitious. The hope is that by catching children young, they can be guided away from joining growing numbers trapped by debt. Personal insolvencies in England and Wales are at their highest level since 2010, and among 18-25 year olds the increase since 2016 is estimated at a worrying 403%.

Financial wellbeing can be radical, but is also about small everyday changes.

Too many of us deep down know we are not saving enough towards our pension. Or end up buying more of what we don’t really need.

But a few virtually painless tweaks here and there can create a huge sense of financial ease, now and in the future.

3 small steps towards financial wellbeing

1) Direct debits are your friend

None of us are big fans of paying bills. The best way to keep on top of them is to set up a direct debit for each, to be paid two days after you receive your salary. You’ll be able to spend or save what’s left, safe in the knowledge you have covered the essentials.

Direct debits may seem rigid - you do have to make sure there is cash in the bank on the day they come out. But they reduce your life admin, and let you see exactly how much money you have left to play with, which can be extremely liberating.

2) The joy of less

One of Netflix’s biggest hits in 2019 was ‘Tidying Up with Marie Kondo’, a surprise hit about decluttering our lives of anything that doesn’t “spark joy”. We’re all guilty of buying stuff we don’t need, often with money we don’t have, eroding our financial wellbeing. Reducing mindless consumption will spread our money further, keep our credit card bills low, and create a satisfying sense of control.

3) Investing in yourself

Why do we love lists? Because they show us clearly and quickly our plan for a day. Ticking things off gives a sense of achievement. Planning for our longer-term future is harder, (it’s tough trying to guess what will happen 30 years from now), but just as mentally rewarding.

Money in a pension grows bigger the earlier you put it in, because of the power of compound interest. Got a pay rise? If you can, add it to your monthly pension contributions - you won’t miss what you didn’t have, and you can sleep soundly knowing you are laying solid foundations for your future self.

How can PensionBee help with financial wellbeing?

With PensionBee you can combine your old pensions and transfer them into a brand new plan, within a few easy steps. You get one simple pension and one clear balance that you can check any time - everything is designed to give you pension peace of mind. Sign up today.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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