Around one-third of the UK population (approximately 17 million people) expects their finances to worsen by the end of 2024. The main reason cited (38%) is the soaring cost of essential items such as food, heating and clothing, with many people linking their worries to mental health challenges.
Undeniably, many people are struggling financially. Housing, in particular, continues to become more expensive each year, with many unable to find affordable accommodation. Nearly half of all UK adults are now living in “financially vulnerable” conditions.
Urgent reform is needed to avoid a spiralling national stress crisis, which is already affecting 5 million people. Yet, you cannot wait for the government to come quickly to your rescue.
At the individual level, there is much we can all do to take greater control of our financial situation—and, in turn, our financial well-being.
Set a Vision for Your Future
One of the biggest sources of stress, discouragement and anxiety is feeling like you’re just living paycheque to paycheque. This describes the situation of around 49% of UK workers, who, even on better days, might feel like they are just spinning their wheels.
Uncertainty breeds anxiety. Whilst you cannot control the cost of living, you can understand your current financial situation. Take some time to write down all of your income sources, monthly bills, debts and savings.
Next, use a spreadsheet or app to identify exactly where your money is going. You will likely be surprised, and it’s important not to pour judgment on yourself if you discover areas of waste. Face your reality with compassion, and make decisions calmly.
Where do you want to be in the future? How could you divert any “currently wasted” income to start moving you closer to that vision?
Perhaps you aim to save for a first mortgage deposit or accumulate enough State Pension to retire with 35 qualifying years of National Insurance (NI) contributions. The simple act of giving yourself a target can make life seem more meaningful, boosting your wellbeing.
Take Financial Control
Yes, this is where we talk about budgeting! However, remember what budgeting is for. It’s not about restrictions. It’s about alignment (lining up your spending habits with your values and goals). It’s about giving every pound a purpose.
The process of budgeting is very empowering and good for mental health. It creates a sense that you are in control of your money, rather than the other way around.
Start with the essentials, such as mortgage, utilities, food, and transport. Are there any options for lowering your costs here without detracting from your joy? For instance, could your mortgage be reduced by switching to a different deal or provider?
Next, examine the non-negotiables that bring you joy, such as coffee, fitness classes, or family outings. Whilst it may be possible to optimise your costs here, be careful about cutting these out. You need things to look forward to.
Then, consider what remains for longer-term goals. What can you now set aside for holidays, retirement or buying a home? Once your budget aligns with your reality, it becomes easier to stick to, and anxiety starts to subside.
Build Your Buffer
One of the biggest worries people face is the “What if?” question. What if you suddenly lost work, or your partner became seriously ill? What if the boiler suddenly broke or you needed to pay for another huge repair job?
Here, an emergency fund can be immensely beneficial. Not only does it reduce the temptation to turn to credit if an unexpected expense arrives, but it also enhances your peace of mind to know that you have money set aside “just in case”.
Generally, financial advisers recommend having 3-6 months’ worth of living expenses saved in your emergency fund. However, for many people, this will feel unattainable right now. If so (or if you are new to saving), aim for £500–£1,000.
Even setting aside £20-30 per month adds up to a small buffer over 6-12 months. Over time, you can build up your contributions (e.g. by 5-10% each month) as you optimise your budget and gain more confidence over your finances.
Eliminate Your Debt
Few things are as suffocating and anxiety-inducing as having costly debts hanging over you – e.g. unpaid credit cards and high-interest personal loans.
If you are not careful, the interest can accumulate every month, creating a snowball effect that can rapidly get out of control. To protect your finances (and wellbeing), set up a plan to start paying these debts off in a responsible way – converting anxiety into action.
One method is to list debts by balance, interest rate and minimum payment. Then, choose a payoff method. There are two main options here:
- Snowball method: Pay off the smallest debt first for quick wins.
- Avalanche method: Tackle the highest interest rate first to save more.
Generally speaking, the first method is recommended, as the debtor attains a faster psychological boost, making it more likely they’ll continue paying off their debts.
Invitation
We hope these insights have given you more confidence to boost your financial well-being. If you’d like to make sure you’re taking the right steps to safeguard your financial future, please get in touch.
The content in this article was correct on 1st July 2025
The value of your investment can go down as well as up and you may get back less than the amount invested
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