It’s January, the start of another new year and a classic time for setting new goals. But what are we going to do this year that is different from the last? The ‘new year, new me’ mindset shouldn’t just apply to diet and fitness; it should also apply to our spending and saving habits which can be just as bad for our health.
While the figures have yet to be reported, retailers will be hoping to see that people spent more on Christmas this year. Consumer confidence indicated that despite things being tighter at home, people were still intending to buy big ticket items as presents and the Boxing Day sales are forecast to top last year’s Christmas, Black Friday and Cyber Monday.
But where does this Christmas spending leave us? With a Christmas financial hangover. According to the Money Advice Trust, more than half of us failed to save up for the festive season and one in six Britons has racked up debts over Christmas that they won’t be able to clear this month. Much like an alcohol-induced hangover, a financial-induced hangover leaves us regretting our decisions, and intending to be better in the future.
And boy, do we need to be better in the future; not just because the price of essentials such as food, fuel and trains are rising faster than incomes but because of the link between financial wellbeing and mental wellbeing. Research by the Money and Mental Health Policy Institute in May 2017 highlights the consequences of financial worries on an individual’s ability to work include struggling to concentrate, losing sleep, feeling additional pressure and reduced motivation.
But making the best decisions about money doesn’t come easily. Rather like that diet or giving up smoking, we always have an excuse; we will start tomorrow or next year.
I noted in this column last July, that improving financial wellbeing isn’t about basic access to financial services or increasing levels of affluence, and it goes way beyond financial literacy and education. Rather, it’s about people having ‘sufficient control’ to enable them to pay for essentials, have occasional luxuries, service debts, save regularly and have a buffer for those unexpected expenses. The first and biggest challenge people will face when it comes to managing their finances is not about finding the best deal or the right technology to access it. It will be about just getting started and giving it a go; getting the scattered information in one place, getting to know their finances, setting a goal, and implementing the plan.
There have been some really successful public behaviour change campaigns over the past few years that have worked well to tackle the nation’s bad habits. Campaigns such as Dry January and Stoptober have completely moved the dial and achieved very positive results. Their success is down to several factors. Both campaigns have effectively created a calendar moment in the year where people sign up in their droves to feel healthier, save money and protect their family by simply giving it a go. The mass participation makes people feel less alone and provides a natural support network. And both campaigns gave us some simple heuristics and brought together all the tools and support into one place. They also recognised the roles played by retailers, providers and employers and made quitting social.
Karen Keogh, head of global philanthropy at JPMorgan Chase said recently: "Financially healthy individuals increase the financial stability of the community". Our financial habits have a huge part to play on our individual heath and in turn, the health of our economy, so looking to create a similar movement around how we approach our finances should be a priority.
The financial services industry already spends a significant sum on building consumer capability, but to really reap the benefits, it needs to focus on helping customers manage their money more responsibly. Wouldn’t it be great if industry could come together to create a calendar moment when we all take stock of our finances, just like those created to improve our physical health?
By introducing some simple rules of thumb, harnessing the resources of providers and employers to communicate at ‘teachable moments’ and making it social, industry and government has the power to improve financial resilience. Creating a social movement around good finance habits could alleviate problem debts, build a heathy savings habit and play an important role in preventing mental health problems.
Breaking bad habits is hard, but if the benefits can make a wealthier, healthier and happier nation, then it is something to be considered.
Jane Asscher is chief executive and founding partner at 23red