Did you know that one in seven people have regular, daily feelings of worry or concerns over money matters? It’s been linked to a lack of financial knowledge. It may not be an issue affecting you, but it could be impacting your children or grandchildren.
Research revealed that the vast majority of people worry about their finances each month. Many admitted they didn’t feel in control of their money situation or financial future. Concerns could leave those worrying feeling helpless and mean they don’t take the steps that could help improve their long-term financial future.
Anthony Morrow, CEO of OpenMoney, which commissioned the research said, “A lack of basic financial understanding is undoubtedly one of the key reasons so many Brits feel less in control of their finances than they did two years ago. It’s impossible to be in control of something you don’t understand.”
The survey highlighted some of the key areas where a lack of financial knowledge could be having an impact.
- Half didn’t know what their projected pension income was
- Four in ten did not know the interest rate they were paying on credit cards
- A third were not sure how much interest they were earning on savings
- One in ten wasn’t sure of their overdraft limit, and a further third did not know the fee meant they were being charged for the service
Unsurprisingly, younger generations with less experience of handling money were most likely to worry about it. In fact, one in four children under the age of 18 said they worried about their financial situation several times a day.
Finances play such an important role in our lives that a lack of understanding could harm mental wellbeing. But how can you tactfully offer your support to loved ones if they’re struggling? This, of course, depends on individuals and your relationship with them. However, these five considerations are worth keeping in mind.
1. Go through their current finances with them
Sometimes, you just need another pair of eyes to improve your financial situation. You may be able to spot where money can be saved, or bills can be cut to relieve stress. You should keep in mind though that finances are private and it’s a topic you may want to approach sensitively. Some people won’t feel comfortable sharing their financial decisions, whilst others will be happy to have a helping hand. Offering your services and then letting them guide what you take a look at can help ensure they’re comfortable.
2. Recognise their situation and goals may be different from yours
When looking at someone else’s financial situation, it can be easy to judge them based on what you would do or have done in the past. However, it’s important to recognise that they may have very different financial and lifestyle goals than you. Whilst a decision may be right for you, it isn’t automatically right for your loved ones. Taking the time to understand their goals can help you see why they are struggling from their perspective and stop well-meaning advice coming off as a lecture.
3. Offer financial support where appropriate
When speaking to a loved one, you may find that financial support could be just what they need. This could be a one-off lump sum to get them on the right path or ongoing support to help out with a particular area. There are two things to think about here. The first is how your loved one will respond to your offer to provide financial assistance. Some people will prefer their independence and other forms of help would be better suited. The second is whether it would affect you financially in the short and long term. Be sure that you fully understand the impact of taking money out of your own estate before moving forward.
4. Let them know it’s ok to make mistakes
We’ve all made some money mistakes in the past. Perhaps you’ve realised you were paying more than you had to on a credit card after the introductory offer ran out or an investment didn’t perform as well as you’d hoped. When you don’t feel in control of your finances, it can be difficult to make a decision because you feel as though you don’t have the necessary knowledge. But making the occasional mistake is ok if we learn from them. Letting your loved ones know this, and the mistakes you’ve made can boost their confidence.
5. Suggest where financial advice could help
Just 12% of adults regularly see a financial adviser, research shows. Those not seeking advice may think it’s not appropriate for them or that the fees make it unaffordable. However, research has suggested that the majority of under-35s would benefit from financial advice. Highlighting how you’ve benefitted from financial advice and the points in life where it can offer clarity and confidence can help. If you believe we can help your loved ones improve their financial security and confidence in their money, please let us know. We’d be happy to help.