What is financial wellbeing?

For us at the Money and Pensions Service (MaPS), financial wellbeing is about feeling secure and in control. It’s about making the most of your money from day to day, dealing with the unexpected, and being on track for a healthy financial future. In short: financially resilient, confident and empowered.

People who experience financial wellbeing are less stressed about money. This, in turn, has positive effects on their overall mental and physical health, and on their relationships.

It’s more important now than ever to help your colleagues, customers and community to build financial wellbeing. MaPS can help your organisation to start or continue developing ways to do this.

There are multiple aspects to financial wellbeing. We break down the UK’s general financial wellness into five key areas:

• receiving a meaningful financial education
• saving regularly
• using credit for everyday essentials
• accessing debt advice
• planning for and in later life. 

And here’s why these aspects of financial wellbeing are so important. Before the pandemic:

• 11.5 million people had less than £100 in savings to fall back on.
• 9 million people often borrowed to buy food or pay for bills.
• 22 million people said they don’t know enough to plan for their retirement.
• 5.3 million children didn’t get a meaningful financial education (Financial Capability Survey 2018).

These statistics offer a strong indication of how financial wellbeing (and generally financial literacy and financial capability) is faring in the UK. Improvements in financial wellbeing can be shown in either a decrease or increase in these key statistics. We survey the nation regularly to keep informed of changes in these personal finance areas.

A financially healthy nation is beneficial for individuals, communities, businesses, and the economy.

Financial stress – and its knock-on effects for mental health, relationship breakdown and physical health – can have severe consequences for individuals, organisations and communities. The economic impact of Covid-19 has affected the mental health of some individuals, exacerbating a nationwide problem.

"Over the period 2020–2030, a key role for MaPS will be to widen the range of leaders committed to improving financial wellbeing in public, private and voluntary sector organisations."

People who enjoy good financial wellbeing are more productive at work. If they are not, employers suffer too. In 2018, 11% of UK workers reported they had experienced a fall in productivity at some point over the preceding three years as a result of their financial situation.

If people don’t fall behind with bills and payments, businesses have healthier profits and cash flow and don’t need to write off debts. People who have financial wellbeing are more likely to spend sustainably.

When people can set aside money for their future, it can be invested in businesses and potentially boost the productive parts of the economy.

Your organisation may already be helping people with their money and building financial wellbeing. For example:

• Does your organisation offer your colleagues workplace pensions or signpost to discounts and debt advice in your employee wellbeing strategy?
• Do your customers/service users ask for help with bills, filling in benefits forms or opening letters?
• Does your organisation signpost to help with money, such as local credit unions, budgeting tips, pensions information or debt advice services?
• Do you help people with stress or health issues caused by finances?

If you help people manage their money and pensions, you are already helping to build financial wellbeing. It may form only a small part of your role or your organisation’s mission, but it’s so important to the people you help that they know they can come to you for help.