A unique study from pensions and investment company Aegon has for the first time assessed the role of mindset in financial wellbeing. Based on responses from 10,000 people and covering more than 1.3 million data points, Aegon’s Financial Wellbeing Index measures both the health of people’s financial position and the critical role that mindset plays in influencing financial wellbeing.
It finds just 18% of people in the East of England or around 904,325 people are fortunate to combine healthy finances and a positive money mindset, and this compares to 10% or just over half a million (502,403) people who score poorly on both sets of factors. But around 5 in 6 of the population could be taking action to improve financial wellbeing.
Aegon’s analysis uses a unique methodology which places an equal weighting on money factors like income levels, budgeting skills, affordability of debt but also mindset factors like peoples’ willingness or ability to consider their future self, put in place a financial plan or think carefully about what really makes them happy. Crucially it is often the mindset factors where most people have the biggest room for improvement.
Common money problems
Healthy finances are of course a key component of financial wellbeing and the study found many people are struggling. In particular;
40% of the population in the East of England have less than £100 left at the end of the month
29% of people in East of England do not have any emergency savings
Just 11% of people in East of England pay more than the auto-enrolment minimum of 8% of qualifying earnings into their workplace pension
47% of people in the East of England have some form of unsecured debt which averaged £5,077
While there is a link between low incomes and money worries, more than half (51%) of average earners and more than 1 in 3 (38%) top earners say they worry about money
The under-rated role of mindset
What was clear from the study was that for most people in the UK, the biggest improvement they could make to their financial wellbeing was to their mindset. Mindset scores were lower than money scores for all but one income group, and the scores did not improve much the higher peoples’ incomes were.
Those in the lowest income bracket in the East of England scored slightly higher on both mindset and money points than others in a similar position elsewhere in the UK.