January 25 2023 | Team nudge
The ultimate financial wellbeing program [webinar write-up]
Watch our webinar on-demand and learn how to create the ultimate financial wellbeing program
So how are you feeling about money right now? Really good; Okay or worried? How often do you think about your level of security, today and for the future?
We all seek a sense of stability and security. The knowledge that we can influence and affect control in our lives is vital for our wellbeing. Whilst we all have differing levels of tolerance to uncertainty, depending on the situation, our experience and resilience, our brains do not like it. Uncertainty is like a torn map. We are unable to complete the full picture and our next steps become unclear, riskier. Worry starts to build and we can freeze, procrastinate and make rash decisions in our attempt to resolve the threat we are facing.
Our brain is a pattern matching and predictive system. Anatomy deep inside our mid-brain absorbs the information we have about our world, compares it to our filed past experience to then interpret what is happening to examine whether we are safe or facing a threat. This interpretation directs our neurochemistry and physiology so that we can act appropriately to keep ourselves out of harm’s way. This process happens without conscious awareness at split-second speed. The brain’s interpretation, also known as emotional reasoning, are the stories we hear through our thoughts and the emotions we feel. What we think and feel combine to direct our behaviour to escape the threat and/or solve the problem and move towards safety.
The trouble is that insecurity and uncertainty is a landscape that our brain’s do not like. A context that can’t be pattern matched because there is no file and therefore no clear action to be taken. We work at a neurological level on a better to be safe than sorry strategy. When faced with insecurity our brains trigger our threat circuitry. Emotions such as anxiety and fear envelope us and worries circle as we try to find answers and a fix.
Financial worry, a sense of being out of control of our stability and security is a threat that can escalate quickly. We can catastrophise and find ourselves strangled by our worry about what will happen. Worries that hijack our attention and reduce our cognitive capacity for good decisions. Our motivation and performance are negatively affected, and over time worries about financial insecurity can have a significant impact on our health both mental and physical. Financial insecurity is listed as one of the top causes of distress with long-lasting declines in mental health, a situation significantly amplified by the pandemic.
Financial wellbeing means so much more than simply the amount of money in the bank account. It represents security, status, freedom of choice, access to opportunities for continued growth and resources to maintain good health.
These are subjective factors. In other words, what for example status means to you is personal and relative to your surroundings – but, these factors are all important to everyone. To be able to take (back) control of our finances is vitally important on so many levels. And, this is a message for all echelons of financial wealth.
Research shows us that we only need enough money. Of course, below a threshold where finances cannot stretch to basic needs, the outcome is dire. But, at a certain point of income (currently around £50K in the UK) there is satiation after which there is little to no gain in incremental happiness. Additionally, the latest research from nudge shows that 85% of people say having skills and knowledge is important for their financial wellbeing and 87% say being in control of money. Whereas only 65% said it was earning as much as possible.
The call-out here for employers is clear. To truly support the wellbeing of your people, financial wellbeing support will give them stability in an uncertain world. And if they are unsure where to start, unbiased skills and knowledge will give people the tools they need to take control.