The benefits of a financially healthy Scotland and UK

Why financial health should be our ethical and financial priority

What is financial wellbeing? It’s about knowing that you can pay the bills, manage your debts, deal with the unexpected and stay on track for your long-term goals. When we feel in control of our money, we tend to be happier, our communities are healthier, businesses are more prosperous and the national economy thrives.

How financially healthy are we?

According to the latest research from the Money and Pensions Service (MaPS), a quarter of the UK’s adult population has less than £100 in savings.

Perhaps more worryingly, the survey of 3,000 adults, carried out for Talk Money Week in November 2022, reports that around a quarter of adults live with no financial safety net except credit. Four out of ten of us use credit.

When more of us feel financially confident and capable, the healthier the nation will be. Positive changes to products, services and regulations in financial services are already helping to build personal confidence and financial skills in the wider population.

Financial wellbeing for individuals

Nearly half of people in the UK (44%) say they would be in fitter shape financially if they were better taught how to manage their budgets and bills, according to a 2022 survey by the Centre for Social Justice. In May 2023, the MaPS reported that less than half the UK’s children had been taught basic money skills, either at home or at school.

It can be hard to admit that you’re struggling financially, or that you don’t understand the basics, so it’s not surprising as many as four in five of us struggle to talk about money.

According to the 2022 Financial Lives survey by the Financial Conduct Authority, almost one in five of UK adults don’t feel confident that they fully understand, or could compare, financial products. That figure rises to almost two thirds (61%) if they are in financial difficulties.

Why financial education is the key

Fixing this requires action by all parts of society – and you’re almost never too young to start learning about money. Evidence shows that children have developed attitudes about money by the age of seven, yet ten years ago, financial education wasn’t even on the school curriculum. Since 2014, financial education has been taught in secondary schools but learning the basics and understanding how to manage money wisely can start in primary schools.

The regional perspective

Where you live has a marked effect on how financially confident or resilient you feel – and how wealthy you think you are. There are huge regional disparities, primarily between Northern and Southern England that affect the way we feel about our finances.

According to SJP’s 2022 Financial Health Index – our nationwide analysis of financial wellbeing – the gap between North and South has widened further. However, the higher cost of living in the South East meant that even those who were relatively wealthy had a lower perception of their wealth.

The solution is universal. Education unlocks empowerment. If you’re an employer, you can help your workforce feel more financially confident through education. Many larger, city based companies have built this into their employee wellbeing programmes already – but it’s often those who work for smaller companies who are more financially vulnerable and need more help.

The financial state of the nation

In February 2023, the ONS reported that one quarter of the UK’s population felt financially vulnerable, with a third struggling to pay the mortgage. And we take our money worries to work. One in ten British workers called in sick due to financial worries, while almost one in five say that these worries affected their productivity. Managing debt can be mentally draining, not to mention the time spent ‘on hold’ to banks which can be frustrating and directly impact our productivity.

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One reason for this impact on our mental health is not knowing who to ask or where to turn for financial advice.

The more confident the general population is, the more financially healthy the country is. “A more skilled and financially attuned workforce will buy and spend responsibly,” says Harriet Shepherd, Financial Wellbeing Manager at SJP. “There’s less likelihood of going into debt.” By tackling the problem head-on, we can improve the financial health of our nation – and our society.

The wider effects on wellbeing

Where does a sense of financial wellbeing fit into people’s general wellbeing? Financial wellbeing is about feeling confident and in control. That could mean having the confidence to invest, or the confidence to deal with debt – or somewhere in between.

Money and mental health are closely linked. When worrying about money, people find that their mood, focus and sleep patterns are impacted as stress takes its toll.

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If you’re already living with a pre-existing mental health condition you may be less able to plan, make decisions or communicate, making it even more difficult to manage money. The strain of worrying about finances can push those experiencing a mental illness to tip into crisis.

Practical, sensitive financial advice can help put you back on track, and back in control.

How you can help

When it comes to spotting the signs of financial stress, we can all look out for our friends and family. If you see signs that someone might be struggling with money and mental health, talk to them. Talking about debt can save a life. If you’re experiencing poor mental health and financial issues, you can always find free, impartial advice at mentalhealthandmoneyadvice.org.

Whatever path any of us choose in life, money often makes it possible. Our long-term goal is to help more people feel financially confident, and to build a financially healthy society for the future.