With just over 60 million people in debt in the country, it is to be imagined that a good part of UK citizens live with the shadow of financial stress in their respective routines, being very far from its opposite: financial well-being.
And, among the harms that this brings, the impacts cover both personal and professional life.
Hence, the importance of knowing what financial well-being is. Its concept has been widely publicized for helping the individual to:
- regain control,
- plan goals,
- have more financial discipline to get rid of debts and their associated problems once and for all.
But don't worry: throughout this post, we will explain everything about financial well-being to you and even point out some tips to establish this harmony in your financial health. Check out!
What is financial well-being?
Before exploring the specific idea of financial well-being, it is worth understanding the cradle of its concept, which began to be designed by the American psychologist Abraham H. Maslow.
During the 1950s, the specialist established the Maslow Pyramid, which pointed to a hierarchy of needs for humanity. With that, a considerable minimum was established to develop the satisfaction we feel in our daily lives, based on these priorities, which are – listed from the bottom to the top of the pyramid.
- physiological needs, which keeps us alive, basically, like hunger, thirst and sleep;
- need for security, which involves shelter and stability;
- love and relationships, such as friendship, good relationship with relatives and also affective relationships;
- esteem, which has to do with trust and respect;
- personal fulfillment, involving more and more personalized layers of priorities. After all, achievement can mean something, for some, and something completely different for others.
The more we climb the pyramid, therefore, the more we understand that financial well-being can be associated with the first well-established and structured steps.
If we don't have the basics, like a shelter and daily food, how to achieve the most ambitious goals?
For this reason, we mention the balance of expenses and monthly income as a good concept of financial well-being.
It is based on the sustainable escalation of this pyramid that we tend to achieve a better balance of those needs that depend more and more on resources to be improved.
What is the counterpoint to this financial balance?
At the beginning of the text, we point out that there are millions of people in debt in the country. And this usually interferes with each step of the pyramid and also with the little things of everyday life.
This we call financial stress. This condition is reflected in irritable, unfocused, demotivating and disruptive behavior, even, since the accumulation of debts dominates the person's thoughts and it hinders your performance in the private sphere and also in the professional sphere.
We even talked about it in another article, and you can check it out as soon as you finish this reading, “Understand the correlation between health and financial stress!”.
The symptoms of this condition are similar to stress itself, but the point is that it is motivated by factors associated with income (and the lack of it) in our respective routines.
Identifying financial stress
Financial stress can arise due to the following factors:
- debts, such as the fear of paying the bills and the accumulation of defaults;
- search for success, which can be constantly frustrated by the challenges that challenge our dreams and ambitions (such as the lack of resources to take professional development courses);
- fear of losing his job, dominating the employee's thoughts and, consequently, taking away his focus and productivity – something that increases during periods of financial crisis in the country;
- aging without quality of life, which potentially increases costs and unbalances the proportion with family income;
- drop in standard of living, and the fear of declining along with less than optimistic financial scenarios in the country.
Hence, the great importance of financial well-being. Based on these fears and the direct consequences of the stress caused by the accumulation of debts, people end up living with symptoms such as:
- low engagement,
For the company, specifically, all this can still evolve into an increase in the number of layoffs. Especially for organizations that understand little about the benefits of employees' financial well-being.
After all, terminations cost – directly and indirectly – a lot of money and time for their professionals.
In turn, investment in financial well-being shows that losses and waste can be translated into a targeting of resources to reverse this situation that is so common in the country.
How to develop financial well-being?
A financial welfare program can be developed by the company. It turns out that, in a particular way, each person can work consistently to reduce financial stress and constantly improve the financial health of their family income.
In the topics that follow, we will highlight some of the best practices in this regard. See just what are the best practices for developing financial well-being:
- Evaluate and design a monthly budget
- Have an emergency reservation
- Prioritize debts
- Think about the future
- Seek professional assistance
- Check if the company deals with financial well-being
Evaluate and design a monthly budget
Do you spend more than you receive over the month? Then, build a budget that is in line with your earnings to prevent this practice from becoming commonplace. This considerably increases the risk of developing and accumulating debt.
This financial discipline is essential for you to start planning according to what your current budget allows.
That way, it’s easier set goals for you to grow, in your pyramid of needs (as we saw in the first topic), climbing it safely.
Have an emergency reservation
Based on what we saw above, try to dedicate a minimum – if any – of your budget to the creation of an emergency reserve.
Understand that we are not talking about investments here, but really about a reserve to be used in case an unforeseen event occurs, such as:
- medical expenses,
- vehicle maintenance and other expenses that can complicate the balance for your financial well-being.
If there are already accumulated debts, prioritize their discharge. After all, fees, interest and fines accumulate and only worsen the situation.
It is important to assess how much you are in default and how much it can increase, month by month, in order to have a defined goal to end the debts.
Even comparing with your budget makes it easier to approach creditors to renegotiate debt and ensure a providential breather to end the financial issues in your life.
An extra tip for you who are already in debt is to read our super practical article, “How to get out of debt: most common types and how to pay them off”.
Think about the future
Do you already think about your retirement? Believe me, this is an important point in anyone's life, and few care about it.
By neglecting good investment ideas, we run a serious risk of reaching retirement age and still have to work to maintain the standard of living.
And that will only build up stress at a stage in life when you should rest, and not maintain an itinerant and tiring routine.
Read too: Everything about what it takes to retire [+ cálculo]
Seek professional assistance
Still focusing on the attention that the individual can take for himself to get out of debt and develop financial well-being, it is worth seeking specialized help.
Coaches, consultancies, personal financial planning … All of these already exist and are available on the market in all content formats.
Learning more about financial education can be elementary so that, in the short and medium term, you can transform your habits and be more aware of spending.
Check if the company deals with financial well-being
Now thinking about the role of the company to assist with the financial well-being of employees, there is a lot that can be done.
From lectures, training, corporate benefits and partnerships with specialized companies, the organization can take the lead and end the financial stress of its professionals.
HR Consultants UK, in fact, is one of the pioneers in this type of solution, in the UK residents market, and has HR Consultants UKy as a product capable of generate more financial flexibility and autonomy for people to have the salary of days worked when they want.
O HR Consultants UKy is an application that allows employees to anticipate part of their wages when they want in a simple and instantaneous way.
Believe me, the benefits for the company are also many such as:
- decrease in turnover;
- productivity increase;
- attracting and retaining talent.
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