How secure do you feel in your finances? Would you describe your relationship with money as “healthy”?
Financial happiness is a core part of financial planning. It describes the state of feeling content with your wealth – having peace of mind and a sense of contentment as you move towards your long-term goals.
Despite this, around 10% of UK adults admit feeling “hopeless” about their financial circumstances – with 34% feeling “anxious” a lot of the time.
Fortunately, it does not need to be this way. In this article, our Carlisle financial planners at Vesta Wealth offer 8 ideas to help you boost your financial happiness in 2023.
#1 Cancel some monthly subscriptions
It can be stressful to feel like you don’t have control over your monthly finances. One quick way to combat feeling powerless is to simply look over your recent bank statements and cancel some direct debits which you are not benefiting from anymore.
Some possible candidates include gym memberships and digital subscriptions (e.g. unused streaming services). Also, have you considered paying for car insurance up-front rather than monthly? This can sometimes offer a discount.
#2 Switch banks
Could you get a better interest rate on your savings elsewhere? Maybe you just don’t feel valued as a loyal customer of your bank. If so, you could consider a switch.
In 2023, it has never been easier to do this under the “account switch guarantee” – allowing you to move your payments quickly. Often, banks will give new customers a “golden handshake” too, such as a £100 gift for moving over to them.
#3 Boost your emergency fund
A good rule of thumb in financial planning is to have 3-6 months’ worth of living costs in easy-access savings, just in case of an emergency.
If your “rainy day fund” is currently low, then consider committing some spare income to build it up. This often helps people feel more secure as they are better prepared to weather potential misfortunes (e.g. losing a job).
#4 Stop watching your investments
If you look at your investments every day, then you are likely causing yourself needless stress.
Research shows that investors are more likely to take reckless risks if they check price movements daily. This is because humans have a strong sense of loss aversion, creating a strong urge to avoid further “pain” by selling too quickly.
A better approach is to trust the long-term investment strategy agreed with your financial planner, only checking it once/twice a year together to keep your asset allocation on track. Not only will this save you a lot of stress, it will likely lead to better performance.
#5 Make a gift
Simply hoarding wealth for yourself is unlikely to fully satisfy most people. Instead, growing a healthy habit of charitable giving is scientifically proven to make us happier.
Making gifts activates key reward pathways in our brains. It gives us pleasure to see a recipient beam with joy – especially if they could not afford to buy the item themselves.
Charity is more difficult when we feel financial pressure ourselves. Yet it is still possible with a strong budget and a personal commitment to serving others.
#6 Envision your “future self”
One reason for financial dissatisfaction is due to people “floating” through life, without a clear sense of where they are going or who they want to be.
Living for the moment, paycheque to paycheque, is likely to leave you feeling deflated, eventually. Instead, try to imagine your ideal future self. What are you doing? Who are you with?
Goals and ambitions form the core of financial planning. After all, wealth is not the end goal; rather, accumulating it is a means to help you achieve your goals.
Maybe you are not sure what you want to achieve, or how to do it. Working with a financial planner can help you explore the possibilities, inspiring you with ideas.
#7 Make the best of the tax year
At the end of each tax year (5 April), many people lose out on various allowances that could have saved them money – had they acted sooner. A good example is your ISA.
Each tax year, you can put up to £20,000 into your ISAs and receive tax-free interest, capital gains and dividends. Once the year ends, however, any unused ISA allowance is lost. This can happen if an individual leaves their planning to the last minute, in February and March.
Instead, consider how you can plan ahead throughout the tax year. This gives you more time to make contributions and enjoy more tax-free returns. Getting the most from the tax system can feel immensely rewarding, so don’t miss out.
#8 Make some savings
According to the Office for National Statistics (ONS), around 42% of UK adults do not expect to save any money over the next 12 months. Yet are you truly powerless over your finances?
Taking time to review your budget could reveal some interesting areas where you could make savings. For instance, could you save on your mobile phone bill by switching to a sim-only deal (if you have already paid off the handset and do not mind keeping it, rather than ‘upgrading’)?
Even saving an extra £50 per month could give a nice boost to your financial happiness, also adding up to some big savings over time.
If you would like to discuss your financial plan and retirement strategy, then we would love to hear from you. Get in touch with your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.
Reach us via:
t: 01228 210 137
This content is for information purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.