Financial Well-Being: The big taboo of personal finances.

This week is Mental Health Awareness Week promoting discussion and awareness of mental health, tackling stigma, and creating a society that prevents mental health problems. Whilst this year’s focus is ‘movement’ one of the consistent underlying themes each year is the impact of financial worries on mental health. Money worries are the most common cause of anxiety with more than one-third of UK adults with anxiety saying they feel ashamed to talk about it according to the Mental Health Foundation¹. 

With the cost-of-living crisis, many people have had to make changes to the way they live in order to deal with rising cost of food and energy. The current crisis is painful for many households with the National Institute of Economic and Social Research predicting low and middle income households’ living standards will not return to pre-pandemic levels until the end of 2026². This sits in the wider context of over a decade of weak economic growth leaving households more exposed to economic shocks.  

Discussing personal finances is one of the biggest social taboos and marred by pre-conceptions, along with the intimidation factor, feelings of embarrassment and being judged. Many believe they cannot afford professional advice, that financial advice is only suitable for high earners and/or those with a large amount of money to invest. 

With no real standard for financial metrics like we have for health such as BMI and weight, it’s difficult to discuss and assess money situations. Advice appears contradictory when we talk to family, friends, and colleagues but the right advice will always be guided by personal circumstances and bespoke to the individual based on current circumstances and financial aspirations.  

In the UK there are several gaps in financial advice, from the affordable advice gap that effects consumers who are willing to pay for advice but think it’s too expensive. The free advice gap affects those who want advice, are unable to pay but are unaware or unable to access free services. The awareness and referral gap affects people who do not know where to get financial advice. These ‘gaps’ are compounded when people have low confidence in their ability to manage their money – around a quarter of UK adults according to the FCA’s Financial Lives 2022³ and the same report states inertia as a common problem. 

One of the ways in which the advice gap is being tackled is the FCA’s Advice Guidance Boundary Review. Read more on the proposals and industry reaction in our recent blog Advice Guidance Boundary Review – More Shades of Grey?³  from Nina Cherry and Aneta Murdza.  

Whilst The Money and Pensions Service has developed a UK Strategy for Financial Wellbeing, a ten-year framework⁵ set out to help achieve the vision of everyone making the most of their money and pensions, more still needs to be done by the financial services industry. 

Look out for our follow up blog that explores this in more detail and how financial services firms can provide support to customers, particularly with Consumer Duty driving change on providing better outcomes for their customers, and for their people to support financial well-being be prioritised like mental and physical well-being. 

Resources for financial well-being: 

Free and impartial help with money, backed by the government | MoneyHelper  

The Money Charity – Financial Wellbeing + Financial Education 

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