Over the past year, we have seen thousands of businesses and individuals experience some form of financial distress. Financial worries are one of the leading causes of suicide in the UK, enabling people to think that life isn’t worth living due to the money situation they find themselves in. According to a 2019 survey by Perkbox, over a quarter of all adults in the UK experience financial stress on a daily basis, with a staggering 0% claiming they never feel stress in relation to money.
Not knowing who or where to turn to forces those suffering from financial worries to bury their head in the sand and allows the issue to persist. Often people feel like due to the problem in hand being caused by themselves, only they can solve the situation which for many is a mountain to climb both mentally and financially. This then sets off a negative thinking cycle that can get very serious and distressing very quickly.
We spoke to one of our financial partners, KWM’s Financial Planner Elliott Winner, on the impact of financial worries, his advice for anyone or any business experiencing these problems and what help is out there to get those suffering to get back on track.
In your experience, just how serious can financial stresses impact a person’s life?
Money worries aren’t just about income and debt, in fact financial stress can be caused by a wide range of situations and factors. With some of the biggest financial challenges we face occurring just once or twice in a lifetime on average, we don’t always have the skills or experience to navigate them on our own leading us to feel isolated and alone when they do come about.
Financial stress can have all kinds of impacts on people from anxiety to thinking completely irrationally. It can have an adverse impact on an individual’s mental health and can also affect confidence, the ability to concentrate and communication with others.
Financial wellbeing on the other hand, is about feeling secure, confident and empowered, leaving people in the best possible position to tackle their problems.
What are some of the biggest contributors that impact potential financial worries (home, business, external sources?)?
Due to the pandemic, the past year for many has been a major circumstantial change, not just in the way we work in terms of face to face or remotely, but also potentially a drastic shift in environment, for example spending many hours a day in an enclosed space such as a spare bedroom.
Contributors can also be health related, for example if a loved one or a key employee within a business falls sick, and in many situations, this will have a direct financial impact. The other considerations can be about life events that have financial implications. For example, a daughter’s wedding, the aspiration to change home, or help children through university. These life events can apply big pressure to individuals who wish to live up to norms that society has placed upon them.
These issues are made worse when no plans whatsoever have been put in place. Not every insurance policy or investment or savings account can remedy every issue, however, if plans are put in place early enough and followed through with, people can then feel comfortable that things have been considered for life events and ‘what if’ events.
What are some of the basic steps that you advise for low-income families or individuals to relieve their financial worries?
Those in the lowest income bracket were more likely to report negative impacts to personal wellbeing. A recent ONS study found that 35% of UK adults who reported being unable to afford an unexpected expense of £850, experienced depressive symptoms compared with 13% of adults who were able to afford this expense.
In the first place, we would advise that families have adequate insurances in place that protect financially against unforeseen events, i.e., illness or death. An emergency contingency fund should be set aside for rainy days, which naturally alleviates the pressure in having to find money in the event of something happening out of the blue.
In the case that none of the above are in place, which is the reality for millions of us, we would advise speaking to a financial adviser who will help them make sense of their situation. When in the heat of the situation, it can be difficult to think clearly and objectively, and that is what an outside professional can aid with, helping to navigate the ‘financial worries maze’ as I like to say.
If a person or business is in major debt, how do you approach their problems and find a solution to rectify the situation they’re in?
A starting point is to simply get a really good understanding of their situation, and then to use the tools in the bag that are available to help and advise them through it.
There is also a range of free support available from the likes of the Money Advice Service and the StepChange Debt Charity. It may feel easier to bury your head in the sand hoping the problems will magically go away, however, naturally the sooner advice is sought, the better the help can be offered, and the problem rectified.
Do you foresee that once the pandemic draws to a close, more and more families and individuals will be in financial trouble following the end to the furlough scheme and government support?
It is quite difficult to predict at this stage, because on the whole, the government acted very quickly to help out the majority of people, and we’d like to think that they won’t let families and business sink specifically during the recovery process once the pandemic draws to a close. There are always casualties in any economic downturn, which history illustrates, however for many the pandemic was an opportunity to reinvent themselves or their businesses. This has led to a change of fortunes for many business owners, which possibly wouldn’t have happened if COVID-19 wasn’t a thing.
What help is out there for people experiencing financial worries that has a direct negative impact on their mental wellbeing?
We would always suggest speaking to a finance professional who can help provide some clarity. This can bring about a feeling of confidence and security which can be the root of the mental health circumstances, allowing you to tap into what the underlying core mental issue really is and how your mindset can break that negative cycle.
There is also now plenty of online guidance from the NHS mental health services as well as most money advice websites. If people are feeling worried, anxious or low for whatever reason, whether that be financially or another cause, then it is advised they speak to their GP and seek the help needed.
We hope this has outlined to you the ways to resolve financial worries and what help is out there for people suffering. If you require any more information on any financial help or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.
Alternatively, if what’s been said has resonated with you and you wish to talk to Elliott Winner, then please contact him on Elliott.Winner@sjpp.co.uk.