There may be some disagreement on the true extent of it, but the UK, like most other western countries, is in the grip of a mental health crisis. Health Secretary Wes Streeting has described it as an “epidemic”.
Several interventions have been shown to improve mental health, particularly mindfulness and cognitive behavioural therapy. But there’s one approach that, in my view, deserves far more attention than it’s given, and that’s financial planning.
Survey after survey shows that money-related issues are a major contributor to stress, anxiety and dissatisfaction. For example, the latest Money and Mind Report from Schroders Personal Wealth shows that 62% of UK adults are either concerned or very concerned about their finances. Of those people, 79% experience impacts on their mental wellbeing.
Good intentions, lack of action
But perhaps the most interesting takeaway from the latest Schroders study is that although people with money-related worries have good intentions about finding solutions, only a small proportion actually take the steps required. 41% of those surveyed said that sorting out their finances was a top priority, and 55% of respondents said they were likely to create a financial plan. However, just 8% currently had a plan in place, while only 6% had consulted a professional adviser.
This is very telling. Most people who are worried about money instinctively know what they need to do — in other words, prioritise sorting their finances out and devise a financial plan. But, for whatever reason, far too few of them actually get on and do it.
What makes this all the more frustrating is the strong evidence that those who have a financial planner report improvements in their mental and overall health. A study commissioned by HSBC Life, for example, found that 73% of people who have a plan and review it at least once a year said they benefit from average or above-average mental health. By contrast, 46% of those without a plan said they had below-average mental health.
Longitudinal analysis published last year by Royal London also revealed that financial planning delivers significant emotional benefits. For example, those who used a planner were far more likely than those who didn’t to feel in control of their finances and financially secure and stable, and to worry less about their financial future. Financial planning clients also reported reduced anxiety and feeling more confident about the future.
High earners have money worries too
There is, of course, a definite selection bias involved in these sorts of studies. People who can afford to pay for ongoing financial planning are generally less likely to have money worries in the first place than those who can’t. That said, people with higher levels of income are certainly not immune to money concerns. And, having spoken to hundreds of planners and their clients over the years, I’m in no doubt that the clarity and confidence that good financial planning provides is hugely beneficial to clients’ mental and emotional wellbeing.
For me, there are two aspects in particular that warrant further research in order to evaluate the mental health benefits of financial planning. The first is the process of identifying what your values are and what’s important to you. These are crucially important questions we should all be asking ourselves, but many people don’t. By asking them, and finding answers, a planner adds significant value to their lives.
The second contribution financial planning makes to our mental and emotional wellbeing is that it helps us to identify what “enough” means. It’s not just the less well-off who worry about this question. In fact, the more money we earn, often the more we crave.
The hedonic treadmill is another common problem. People dream of buying a better car, the latest smartphone and so on, but when they do, it doesn’t give them the lasting satisfaction they hoped it would. Again, by posing the right questions, a financial planner can help people to break this cycle and learn to appreciate what they already have.
I wholeheartedly applaud the work done by the Money and Mental Health Policy Institute, founded by Martin Lewis, over the last nine years. Quite rightly, the charity has focussed its attention on the less well-off — for example, winning debt respite for those receiving mental health care, and changing rules that forced lenders to send distressing debt letters.
Surely, though, it’s time to recognize the emotional benefits that financial planning — even if it’s only a one-off plan — can provide for those at all levels of wealth?
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