Financial Well-Being: A Closer Look | Blog | UnaVida Wealth Management Ltd

Financial Well-Being: A Closer Look

What is meant by financial well-being?

It’s the peace of mind that comes from being financially secure and having the freedom to make choices, both today and in the future. It isn’t just about having lots of money, but it’s about the sense of stability and control one feels over their financial life.

In 2017, an in-depth survey of US households, focused on understanding this very concept. Spanning ten measures of financial well-being, the study attempted to grasp a holistic view of financial health. The facets that were examined included aspects of income and employment, the cushion of savings and emergency reserves, experiences from past financial decisions, and crucially, the behaviours, skills, and attitudes towards money.

Every participating household was evaluated and scored, not just based on their straightforward responses, but also on individual and household characteristics. The aim was to identify patterns and underlying factors that might influence a person’s or a family’s financial well-being.

But how does this compare on an international scale? Well, the results have a striking resemblance to those in the UK. Given that both nations boast highly developed economies, this may not come as a surprise to many. An intriguing point of similarity was the state-supported pension scheme in both countries. The state pension systems act as safety nets, offering citizens a baseline of financial security in their twilight years.

In conclusion, financial well-being is an intricate blend of various factors, whether in the US or the UK, it’s evident that a well-structured state pension system plays a prime role in influencing and fostering this well-being among its citizens.

Here’s a breakdown of the ten points:

  1. Personal Empowerment:
    Having a financial planner advise you on your financial situation can provide a roadmap to your future. The plan assists you in shaping your destiny. Without a clear plan and regular advice and understanding, how else will you arrive at your desired lifestyle?
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  2. Beyond Bank Balances:
    What does money mean to you, it is not money itself that counts, rather it’s the security and opportunities it provides. It’s the difference between lying awake at night worrying and resting easy, knowing you’re prepared for the future.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  3. Comprehensive Measurement:
    The Financial Well-Being Scale reflects your financial habits, attitudes, and vulnerabilities. By looking at the entire picture, you can spot patterns, strengths, and areas of concern, helping you navigate away from potential pitfalls.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  4. Factors Influencing Financial Health:
    Your financial feelings and behaviours are influenced by past experiences, personal beliefs, and even societal pressures, and these influences may prompt you to be hesitant or ambivalent about making financial decisions. Guidance from a knowledgeable third party combined with you acknowledging your personal traits may help you to overcome them
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  5. Value of Savings:
    A savings account isn’t just a safety net; it’s a psychological cushion. Knowing there’s a buffer between you and unexpected expenses can reduce anxiety. Without emergency savings, an unexpected event may lead to stress and financial hardship.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  6. Learning from the Past:
    Past financial decisions, both good and bad, are lessons in life. By reflecting on these experiences without judgment, you can gain valuable insights that positively impact your financial growth.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  7. Mindset Matters:
    Your attitude towards money can shape your financial trajectory. A proactive, positive mindset can propel you towards financial security. In contrast, ambivalence can lead to missed opportunities and potential pitfalls, creating a future riddled with uncertainties.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  8. Reliable Resources:
    With reliable financial data, you can make informed decisions. Enlist the assistance of an experienced financial adviser to guide you and your family.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  9. Guided Understanding:
    Read books, articles, and listen to podcasts, improving your financial knowledge allows you to make informed and smarter decisions.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual
  10. Universal Relevance:
    Everyone grapples with financial decisions, big or small. Knowing that others share similar concerns and aspirations can offer comfort and a sense of community.
    Understanding-Financial-Well-Being-UnaVida-finanical-planning-visual

A Comprehensive Guide to Financial Well-Being

Decoding financial well-being is essential for consumers, practitioners, and policymakers alike. As the pursuit of better financial lives is tied deeply to personal objectives, one often wonders, “What is the key to financial well-being?” The answer lies in understanding and implementing fundamental principles.

Being proactive in managing finances is of utmost importance. A passive approach can lead to unforeseen challenges. Engagement, planning, and awareness are critical in ensuring a secure financial future.

So, what are the 5 steps to financial well-being? While this blog mentions more than five, let’s highlight the most crucial ones for the benefit of our readers:

  1. Set Clear Goals: Whether you’re aiming for a vacation, a new home, or a relaxed retirement, knowing your goals for the short, medium, and long term is fundamental.
  2. Budget and Track Spending: An organized budget detailing your incomes and outflows can be a game-changer.                       
  3. Emergency Fund: Unpredictable expenses can arise at any time. Being prepared with a substantial emergency fund is a safety net everyone needs.
  4. Limit Debt: High-interest debt can be a black hole. Avoid it for non-essential purchases and prioritize its repayment.
  5. Educate Yourself: Knowledge is power. Staying informed about personal finance can significantly influence your financial decisions.

Beyond these five, the role of the UK State Pension is undeniable in achieving long-term financial well-being. With changes in the state pension age, understanding and incorporating the UK State Pension into financial planning becomes even more important.

Other important steps mentioned in the blog are:

  • investing wisely, 
  • planning for retirement early, 
  • regularly reviewing finances, and
  • protection of assets.

It’s also beneficial to seek professional advice to live within one’s means and maintain a positive financial mindset.

Everyone is different with varying aspirations and different outlooks on life, but there is one thing that everyone has in common – whatever their lifestyle is currently, they are not prepared to accept less and want an improved lifestyle in the future. With the right advice from Unavida Wealth Management Ltd., it’s possible to achieve your desired financial goals.

Registered in England and Wales. Registered Number 5553273.
Registered Address: 8f Millars Brook, Molly Millars Lane, Wokingham, Berkshire, RG41 2AD.

A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

UnaVida Wealth Management Ltd. is directly authorised and regulated by the Financial Conduct Authority (440577).

The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.