Three tips to help you improve your Financial Wellness

Clemency Hitchings 23 May 2017

According to the latest Financial Wellness Index, 55% of the UK are currently ‘financially exposed’, which means that over half of us could find ourselves in financial difficulty in the event of a personal crisis like serious illness or job loss, or a national crisis like a recession. In fact, the number of people who are classed as financially exposed has increased by 7% this year. But, if you’re one of the majority of people in the UK that falls into this category, what can you do? From short-term changes like making sure you can afford your expenses each month to ensuring that you’re putting enough away for retirement, here are three ways that you can give your Financial Wellness a boost this year:

1. Carry cash more often to stay in control of your spending

The amount we spend on credit and debit cards is increasing in this country by 9% every single year, and Brits now carry, on average, just five pounds in cash. The problem with this trend, however, is that it’s much easier to overspend when you chuck most of your expenses on plastic. Research from a US-based credit company found that you’re likely to spend between 12 and 18% more on a credit card than if you were paying with cash, so if you want to get strict with your budget and give your short-term finances a boost, go old school and make sure you carry cash everywhere.

Work out what you can afford to spend each week on food, entertainment and other unplanned expenses, and take that amount out in cash. Find yourself spending more at the weekend? You may find that starting your ‘week’ on Friday helps you to stay in control, as you can enjoy yourself at the weekend when your budget starts, then cut back during the week to make that cash last.

2. Make sure you’re preparing for the retirement that you want

Pension auto-enrolment was enforced back in 2012, meaning that your employer is now required by law to contribute to a pension on your behalf. Despite this, when Financial Wellness Index participants were asked whether they agreed with the statement “I have made adequate provisions for my retirement”, 15% did not agree at all. But if you can’t afford to up your contributions, what can you do to make sure you’re preparing for retirement?

One thing you can do is to make sure you’re keeping on top of your pension pots. Every time you change your job, your new employer will probably set you up a new pension fund. And, with the average worker now switching roles as many as nine times over the course of their career, millions of people are in danger of forgetting or losing pension pots, leaving them thousands of pounds worse off in retirement. It costs nothing to spend some time doing a bit of pension admin, consolidating pots where appropriate and changing your details so your provider knows how to reach you, and it could help to prevent your hard-earned retirement income becoming lost.

3. Struggling to save? Automate it!

As a nation, we’re collectively failing to prioritise savings. One of the most concerning revelations from the 2017 Financial Wellness Index was that almost one in five (24%) UK adults currently have less than £100 in savings, leaving millions of us at risk of serious financial difficulty. In fact, ‘savings, assets and security’ was the only area of the Financial Wellness Index in which we, as a nation, did worse this year than last.

If you struggle to prioritise saving each month, you may find that simply automating the process helps you to stick to your savings goals. Set up a direct debit from your main account into a savings account to go out as soon as you get paid, whether it’s 5% of your salary, 10% or more. By moving the money as soon as you receive it, you won’t be tempted to spend the money, and you should soon see your savings start to add up.