The financial one isn’t most important … but it can cause most damage
The term wellbeing gets thrown around a lot nowadays. On face value we might think it’s about being happy and healthy … but as ever it’s more complicated than that.
What exactly is wellbeing?
Gallup scientists have explored this question for years, including via deep studies into how the term is interpreted around the world.
As a result they’ve identified five core pillars that comprise overall wellbeing:
- Career wellbeing: this isn’t earning tonnes of money but enjoying what you do.
- Social wellbeing: this is having strong relationships and love in your life.
- Financial wellbeing: this isn’t being rich but feeling secure and not worrying.
- Physical wellbeing: this is about good diet, exercise, sleep and general health.
- Community wellbeing: this is having a positive impact on the lives of others
Apparently, two thirds (66%) of us score well in one or maybe two of these pillars but only 7% rank highly across all five, and that’s important.
Because the pillars don’t exist in isolation – they’re very much linked.
Wellbeing pillars and connectivity
In and of itself, financial wellbeing isn’t the most important pillar. The world’s longest happiness study – which tracked 700 people over 85 years – suggests that social and community wellbeing are more pivotal. But we’re quickly learning that financial wellbeing, or a lack of, may be most damaging.
In 2022, various datasets found that financial pressure has, quite understandably, risen to become the leading cause of stress and poor mental health in the UK, overtaking relationships, parenting and physical health.
Females are more likely to lack financial wellbeing than men and the younger a person is the worse it gets: of those employees experiencing poor financial wellbeing, 35% are 25-34-years-old and 32% are 35-44-years-old.
Financial stresses demonstrably leak into other wellbeing areas as those struggling are more likely to report feeling disconnected from work and social ties, and twice as likely to have suicidal thoughts.
Financial wellbeing explained
At Money Means we’re primarily (but not exclusively) here to help people to focus on the financial pillar of the wellbeing five.
And because we know it’s inherently linked with wider wellbeing, we like to break financial wellbeing into five manageable, connected pieces:
- Income: a stable and sufficient income to meet basic needs and hit financial goals.
- Savings: enough money saved to cover unexpected costs and plan the future.
- Debt: managing and reducing debt in a responsible and sustainable way.
- Financial literacy: necessary knowledge and skills to make informed decisions.
- Emotional wellbeing: resilience against stress, anxiety, and other emotional responses when related to financial matters.
A neat way to look at financial wellbeing is as the sum of these five parts: financial wellbeing is sorting the past (3), the present (1) and the future (2). It’s about sharpening knowledge (4) and developing confidence so money doesn’t impact wider wellbeing (5).
Image taken from page 228 in The Money Means book – available now.