Financial wellbeing: what is it and how to achieve it.
In this article we will define what financial wellbeing is. We will consider how this is linked to and can impact overall mental health and think about why this is particularly important for anyone working in early education and care.
To support you to feel secure, resilient and empowered financially, we will explore how to:
- Create a budget that works for you
- Find ways to save on daily expenses
- Build an emergency fund
- Access financial help
- Reduce financial stress and dealing with the unexpected
- Plan for the future
Why is financial wellbeing important?
Financial wellbeing as defined by The Money and Pensions Service, 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.
There is a lot of evidence to show that money and wellbeing are linked.
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 has been well publicised how the COVID-19 pandemic deeply impacted the Early Years Education and Care sector, which has long been associated with low wages and limited financial security. For professionals these challenges have been magnified post pandemic by inflation, stagnant wages and increased living costs in essential areas like housing, food and energy, putting many under even greater financial strain.
Whilst these challenges are significant, it is important to remember how essential, valuable and rewarding our roles in early education and care are. It’s essential for us to recognise ways to take control of our finances to help reduce stress and even start building a more secure future with practical steps to help ease the burden, build resilience and improve financial wellbeing.
Ways to look after your own financial wellbeing
As early education and care professionals, your focus at work is on looking after others. However, there are times when you may need support in relation to your own financial wellbeing.
Create a budget that works for you
One of the most important steps in managing your money effectively is to create a budget. Knowing exactly how much money comes in and where it goes will help you make sure your essentials are covered and prevent overspending.
Start by tracking your expenses, listing essentials such as rent, utility bills, groceries and travel and then other non-essentials like entertainment and socialising. Then, set realistic spending limits based on your income and stick to these.
Knowledge is key - You can use a budgeting tool like this free Budget Planner to help give you a clear overview of your finances.
Find ways to save on daily expenses
Small savings can add up over time. By being mindful of your spending, you can stretch your wages and make your money go further.
Planning ahead with meals and batch cooking you can save money on groceries and help avoid the temptation of ordering food or eating out for convenience. You can also shop smarter by taking advantage of the discounts in the benefit hub to further reduce costs.
If possible, walk, ride a bike to work or car share to cut down on transport costs. Shop smarter by buying second hand/pre-loved, using sites like Ebay or Vinted and try to avoid impulse purchases.
Build an emergency fund
Saving even a small amount, such as £10 or £20 a month can build up over time and create a financial safety net to cover unexpected expenses, like medical bills or car repairs, without having to go into debt. By setting up a standing order from your current account into a separate savings account, after you have received your wages, it will help you save consistently without having to think about it.
Manage debt wisely
Debt can feel like a significant burden, especially on a low income. It’s important to deal with it effectively to avoid falling into deeper financial hardship and prevent the associated stress that comes with this. Take stock of any current outstanding debts. You might choose to start to address these by prioritising high interest debts and focusing on paying these off first.
Access financial help
Investigate whether you are eligible for any kind of additional financial help and support in the form of benefits, relief, grants or charitable aid.
Reducing financial stress - dealing with the unexpected
If you do have concerns about your finances, whether in relation to meeting your costs day to day, paying off debts, or decisions about your pension, you can get free, independent information and guidance from the government-backed Money Helper service.
Planning for the future
Taking small steps towards your longer-term financial security will all add up over time. Consider contributing to an individual pension plan, especially if your employer offers to match contributions. Speaking with a financial advisor can help you create a long-term plan even on a limited income. Some charities and non-profit organisations can offer free or low-cost advice.
Next steps
Whilst many professionals working in early education and care face significant financial challenges there are steps that can be taken to improve financial wellbeing. By maximising support, managing debt, reducing expenses and planning for the future it is possible to gain greater control over your finances. While these strategies won’t solve all financial difficulties, they can provide some relief and help create a path towards greater financial stability in an uncertain economic environment.
Our members have access to a seven-part course that delves into all aspects of finance. It covers a range of different financial matters, from budgeting and savings to mortgages and retirement, and serves a useful starting point to help you on your way to better financial well-being.
