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Writer's pictureThe YU Team

Financial Literacy and Wellbeing



This week sees Financial Awareness Day, which is dedicated to highlighting the importance of financial literacy and encouraging people to be aware of and take control of their financial health.

 

There are many people out there who do not understand money, how it works, what to do with it, and the ways in which they can plan for a secure future. It is crucial that we learn about budgeting, saving, debt management and investment to be able to make sensible, informed decisions that form the basis for our lives.

 

Our financial health constitutes a vital pillar of our mental health – when there are issues with money, it can have huge knock-on effects on the rest of our life. If we’re worried about money, it can consume our thoughts and overwhelm our emotions, negatively impacting our wellbeing. We might feel anxious and stressed, or guilty and ashamed. We might have trouble sleeping, or we might be unable to afford things we want to, or even the basics for a healthy life. Money struggles can also affect our social relationships, causing us to feel isolated or unsupported.

 

It’s the same vice versa: having poor mental health makes it more difficult to manage money, and more likely to experience difficulties. For example, if you’re feeling depressed, it is common to avoid tackling money issues, like not opening bills, ignoring warnings, or not checking your bank account. Some conditions can also make you reckless with your spending or overspend in order to feel a buzz. All of this can result in poor decisions or mounting debt.

 

We can never completely protect ourselves against all financial eventualities (global financial crisis, anyone?), but having a robust and knowledgeable foundation can give us a head start. It’s not necessary to be an expert, but a solid basic understanding is vital to ensure that we avoid the most common pitfalls that can quickly push us into dire straits.

 

Being more financially aware allows you to have a better handle on money, which gives you a sense of peace and security. It enables you to understand your incomings and outgoings, know how to budget, learn how to save for emergencies and long-term plans, and invest for the future. Having a grip on your money should stop you falling into unmanageable debt, and will give you a platform on which to build your life

 

Below, we have listed some tips to help get you started on your journey to financial literacy:

 

  • Keep your financial documents in one place so that you can find them easily – that’s bank account details and statements, bills and receipts, mortgage/insurance/loan correspondence, and payslips, timesheets and/or benefits paperwork

  • Check your bank account regularly to ensure that you stay on top of your incomings and outgoings

  • Create a budget that suits your income and your lifestyle, and understand what you need to do to stick to it

  • Get a clear picture of any debt you have – understand how much you owe and to who, what the payment terms are, and whether you can afford to pay. If you need help managing debt, check out our previous blog which offers helpful tips and lists organisations who can help

  • If you are in a position to do so, start saving. Having a cushion for emergencies helps to minimise stress and panic when unexpected things happen

  • Keep a diary of your spending in relation to your mood, to help you understand what you spend and why, and how it makes you feel when you do, so that you can take steps to alleviate any bad habits

  • If you can afford it, seek advice from a financial adviser. If you can’t stretch to that, spend some time browsing the information and advice on Money Saving Expert so that you can begin to take control of your finances

 

So many of us bury our heads in the sand about money because it seems too complicated and intimidating. But some simple organisation and tracking of expenses can put you on the road to improved financial health, which can ultimately lead to a better life overall. It may be said that money can’t buy you happiness (which it can’t), but getting your head around your finances is a great start towards a solid and secure future.

 

 

Photo by Fabian Blank on Unsplash

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