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7 steps to better financial wellbeing

6 min read
09 Mar 2021

The concept of financial wellbeing is about people feeling secure and in control – knowing that not only are they able to manage day-to-day and deal with the unexpected, but that they are also building towards a healthy financial future.

So, how do you get that sense of financial wellbeing? Chris Hardie, Financial Planner, talks us through the 7 key steps to achieving it.

Understanding your financial position

Do you know how many pensions you have? A lot of people don’t, and it’s a common issue we see with new clients coming to 7IM for help and advice. Which makes it the first step in getting to grips with your finances – knowing what you have and where it is.

In latest figures, 6.6 million people have lost track of some, if not all, of their pensions. That equates to approximately £20 billion in assets *. That’s a lot of money going unclaimed.

So, keeping a record of all assets and income and tracking down those lost pensions could really help to get you started on the road to financial wellbeing.

Save more

As Albert Einstein allegedly once said, “compound interest is the 8th wonder of the world”. What does this mean in reality? Save early and save often. For example, if an investor starts saving at 25 and then stops aged 35, they would have more cash than someone investing from ages 35 to 65. Missing out on the first ten years of compound interest on savings can make a huge difference further down the line. If, like many of our clients, you’re not at the spritely young age of 25 and looking to start saving, you may think you’ve missed on this. However, you can make a difference to the next generation. By setting a regular savings scheme for your children or grandchildren. However small that amount might be, this can really help get them on the right track for the future.


You may not think it, but having the right insurance for your and your family’s circumstances can provide a real sense of financial wellbeing. Many of us might think we’re invincible, but you never know what’s around the corner, as the last twelve months have sadly proven. So, do you have insurance and protection in place for the unforeseen? By planning for the worst-case scenario, you can put provisions in place to cover your and your family’s wealth. Whether it’s income protection, life insurance, or simply reviewing your employee benefits, it’s definitely worth considering.

Make your money work for you

It’s easy for us to say save more, invest more, and put some money aside for when you need it most. But, in reality it can be hard to justify putting savings aside if you don’t know what you’re saving for. So, save for a purpose. Set a goal for what you want your money to achieve and work backwards.

Do you want to retire early? Do you want to set sail around the world one day? What about helping your kids get on to the property ladder? Whatever it may be, by having this clear purpose for your money you are much more likely to be committed building and maintaining it.

Use the allowances available to you

Making sure your investments are working in the most tax efficient way for you is important too. The UK government provides several allowances to help. Whether you have an ISA allowance you can use (up to £20,000 per year for the tax year 2020/21) or perhaps a Junior ISA to use to help save for your kids future (up to £9,000 per year for the tax year 2020/21), these are useful tools to take advantage of. By investing in a stocks and shares ISA, your investments can grow in value tax free. The same can apply with pensions – you can also claim tax relief on pension contributions, up to a certain amount, which for most is the lower of your salary or the ‘Annual Allowance’ of £40,000; (although this can be reduced to as low as £4,000 for high earners).

It’s important to take financial advice before you embark on any specific tax work, as taxation will depend on your circumstances and the rules are subject to change, so you can get caught out if you don’t follow the rules.

Wills and Powers of Attorney

There is a surprisingly large number of individuals who do not have a will in place – 54% of the population**. People don’t like to think about death, but by planning for this inevitability, you can save yourself, and your family a lot of stress, both emotionally and financially, further down the line.

There are two ways to do this – firstly, write your Will and keep it up to date. Dealing with a dispute over a loved one’s estate after they’ve passed away is not how many would want to spend their time grieving. In line with this, be open about your Will, and what you want to happen after you’ve gone. Talk to your family, and make sure they’re clear about your wishes.

In addition, there is, almost more importantly, the Power of Attorney. By putting this in place when you still can, you will be safe in the knowledge that if the time comes where you are no longer able to take care of yourself and your finances, you and your family will know what to do.

Retirement planning

As humans, we often associate retirement with a slow decline into care homes and eventual death. However, we try to get clients thinking about it differently. Your retirement could be up to 30-40 years long, depending on when you take a step back from working life. That’s a huge chunk of time, that many often overlook. It’s all well and good planning your finances for care home fees, but what about before then? Expenditure is rarely seen in a straight line on a chart – in retirement, that line will often go up before it starts to go down, when you can actually enjoy your free time and spend the money you’ve worked so long to earn. So, working backwards and making sure you have a plan for your retirement and what you want to do, will help you put a plan in place for your finances, well in advance of when you might need them.

In summary, take a step back. Look at what shape your finances are in now, and what needs to change to help you reach that end goal. And spend money now on the important things – legal advice, wills, insurance etc – as they will be the best investment for your next of kin. Finally, make a plan, but make sure it’s flexible. As the last year has shown, anything could happen.

If you follow these simple tips, then whatever the world throws at you, you can keep working towards that sense of financial wellbeing.

Tax rules are subject to change and taxation will vary depending on individual circumstances.

You should be aware that the value of investments may go up and down and you may receive back less than you invested originally. Please consult an adviser before making a decision to invest.

*Pensions Policy Institute (PPI):

**Research by Royal London:

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