- first direct publishes second ‘Money Wellness Index’ uncovering the changing state of the nation’s relationship with money
- More than half (54%) of adults want to become more financially resilient
- 2 in 5 Brits are more likely to save for a ‘rainy day’ emergency fund (40%)
- 43% are more likely to pay more attention to their day-to-day spending
2 October 2020
first direct has launched its latest ‘Money Wellness Index’, revealing the state of the nation’s emotional relationship with money and our wider financial wellbeing since the onset of the global pandemic.
first direct launched it’s annual ‘Money Wellness Index’ in January this year, with the intention of reviewing it on an annual basis. But, given the unprecedented economic upheaval this year, this new Index was brought forward in order to develop a deeper understanding of the impact that the pandemic has had on people’s financial wellbeing so far.
Over 4,000 adults were surveyed to examine everything relating to their attitudes towards money, from levels of confidence in their managing finances, to where they go for support, and factors impacting on financial wellbeing.
Additional questions were also added to understand specifically how the pandemic has affected people’s emotional relationship with money.
Putting a (new) figure on financial wellness
The Money Wellness Index shows an overall money wellness score of 48 out of 100. While this actually represents a slight increase in comparison to January’s index (47), it doesn’t tell the whole story, with significant fluctuations across demographics and geography:
- 18-25 year olds have the lowest money wellness score (43), whereas those aged 55+ – with a likely higher level of income and savings, together with a higher proportion of home-ownership, job security – exhibited the highest score of any age group (58).
- In terms of regional differences, the Index showed people living in Yorkshire and Humber (52), Wales and the South West (51) have the highest money wellness scores, with Londoners the lowest (45).
Despite the fact that over a third (34%) of adults report feeling more anxious about money as a result of the pandemic, there was also some positive findings:.
- 43% are more likely to pay more attention to their day-to-day spending
- More than half (54%) want to become more financially resilient (with most associating this with the ability to cope with either a personal or economic crisis).
Guy Shone, CEO of Explain the Market who helped contribute to the report says: “With the survey conducted last month, the fact the score has increased (albeit slightly) is likely to have been driven by two main factors. First, the period of lockdown resulted in reduced outgoings for many, resulting in a large proportion of people feeling they can better afford the things they need. Second, the support measures put in place by the Government, such as furloughing and mortgage relief, will have alleviated the immediate financial pressure on many.
“It’s also important to note these interviews were conducted after the national lockdown was lifted in July and a degree of normality had been re-introduced which buoyed consumer spirits. However, the divergence of the score across age groups and demographics, reflects how the virus has also impacted lives in varied and unequal ways.”
A desire for change
Looking forward, consumers are examining what ‘the now normal’ looks like for them, and according to a separate piece of YouGov research conducted in April, 9 out 10 Brits do not want to go back to a pre-pandemic ‘normal’.
Indeed, this desire for change is reflected in a shift in financial behaviours. The ‘Money Wellness Index’ reports that 2 in 5 Brits are more likely to save for a ‘rainy day’ emergency fund (40%) and 39% say they are motivated to get better prepared in case of another economic crisis. Promisingly, 27% also say the pandemic has inspired them to improve their financial knowledge.
Helen Priestley, Chief Marketing Officer at first direct said: “This year has seen us all face significant changes across every aspect of our lives. Families have been turned upside down, feelings of isolation and anxiety have been felt widely and not to mention tragedy for those whose loved ones have been worst affected.
“At first direct, we believe the subject of financial wellness continues to lack the meaningful engagement so urgently needed when money is such a fundamental driver of mental health. Our ‘Money Wellness Index’ is an important part of our mission to empower people to develop and maintain long term financial wellbeing, because people cannot feel truly well, unless they are financially well.”
Prioritising our financial health
first direct believe that in order to look after our financial health, we need to treat it in the same way we would deal with our emotional and physical health. And this often involves developing new behaviours and habits in order to forge real change.
Neuroscientist, clinical neurologist and behaviour change expert, Ash Ranpura, commented: “The most important step is to realize that money is, in fact, a wellness issue. Your feelings about money matter, they have an effect on your financial decisions and on your overall health. So the first thing on the agenda is to take stock of how you feel about your financial life, to articulate any emotional blocks or anxieties you might have, and to allow yourself to feel optimistic about the future. And because money is an emotional issue, a human issue, it makes sense to deal with your financial health the way you might deal with your physical health and your mental health. Educate yourself a little, and consider getting some professional advice. This might be something as simple as reading an article online or in a magazine, or as complex as a relationship with a financial advisor. A little bit of knowledge can give you some perspective, and make you feel a little more in control of your own life.”
Ash Ranpura: 4 steps for changing our financial mind-sets
- Pick a starting point: Research shows that it is easier to start a new habit on a recognized date, like New Year's Day, or the first of the month, or a birthday. Payday for instance could be a great day to start a budget or changing an aspect of your spending.
- Break the task up into smaller pieces. Often large projects comprise many smaller projects, some of which are unappealing and/or overwhelming. Find the smallest starting point that could be enjoyable and do that. Maybe download your bank’s app on your phone, or find a podcast about good financial habits. If you allow your brain to enjoy what you're doing, your new habits are far more likely to take hold than if you fight your brain at every step of the way.
- Be your own secretary. Imagine that you aren't personally invested in either the problems or the solutions. So if you're not on top of your credit card debt or you're not sure whether to refinance a mortgage, instead of beating yourself up about it just imagine that you are your own secretary. Your job is to make progress on these financial errands and you need to do a good job, but at 5PM you're going to clock out and leave it alone for the day.
- Use heuristics: A heuristic is a decision rule, or a rule of thumb. It's a way to allow yourself to make complex decisions rarely and simple decisions often. For example, you might have a rule that every single time you get some income you'll put a percentage of it in a savings account. You can figure out how to manage your savings later, the purpose of the simple heuristic is so that you don't have to think about savings all the time.
The ‘Money Wellness Index’ can be downloaded here and Dr Ash Ranpura’s blog will be available here from 2 October.
Ends
For further information please contact Ben Marquand (ben.marquand@firstdirect.com // 0113 2766700) or Olivia McCulla (omcculla@webershandwick.com // 07745722212)
Notes to Editors:
About first direct
first direct provides mobile banking, online and telephone services to its 1.5m customers and offers a full range of personal banking products including its multi-award winning current account and mortgages. It’s been recognised as being a pioneer of amazing customer service by numerous independent third parties including The Competition and Markets Authority, Which?, Moneywise, Moneyfacts and Moneysavingexpert.com. As well as its Facebook page, first direct uses social media to engage with customers through LinkedIn Opens an overlay [Will show a security message first], YouTube Opens an overlay [Will show a security message first] and Twitter.
About Money Wellness Index
The Money Wellness Index 2020 is a measure of how UK adults feel about their relationship with Money. The index was derived from a large quantitative research study conducted by YouGov between 4th and 6th August 2020, of 4,304 UK adults.