Pensions and investment company Aegon has launched The Aegon Financial Wellbeing Tool to help people assess the role mindset and money plays in their own financial wellbeing and to make improvements.
The new tool is based on Aegon’s recent report** Aegon’s Financial Wellbeing Index which measures both the health of people’s financial position and the critical role that mindset plays in influencing financial wellbeing.
The report found that more than 19 million* people (36%) in the UK are struggling with their financial wellbeing and that just 16% of the population or around 8.6 million* people are fortunate to combine healthy finances and a positive money mindset, and this compares to 12% or nearly 6.5 million people who score poorly on both sets of factors (see lists below). But around 5 in 6 of the population, or 45 million people, could be taking action to improve financial wellbeing which is why Aegon has launched a new online tool for anyone to use.
Aegon’s unique methodology places an equal weighting on money factors like income levels, budgeting skills, affordability of debt and also mindset factors like peoples’ willingness or ability to picture 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.
The animated, intuitive tool asks ten questions taken from the larger Aegon Financial Wellbeing survey. Each question will be scored out of 10.
The tool uses 5 questions on money and 5 questions on mindset to draw conclusions about the financial wellbeing score of the individual.
|Money blocks||Mindset blocks|
|• Income level
• Rainy day fund
• Manageable debt
• Smart long-term savings
• Value of other assets inc. property
|• Joy and purpose
• A solid picture of our future self
• Savvy social comparisons
• A long-term plan
• Financial literacy
Once the individual has responded to each of the questions a score is displayed, benchmarked against an average score and showing their current financial wellbeing strengths and areas for improvement and outlining the steps they need to consider to improve.
The tool will then provide insight and a range of links, resources, facts and information based on the elements they’ve scored lowest in to put them on the path to better financial wellbeing.
Focus on employee financial wellbeing
Aegon will be encouraging employers to use the tool in workplaces with employees to help improve employee financial wellbeing. By helping employees navigate financial uncertainty or spot an area where they can make simple changes, employers can feel confident that they they’re helping colleagues with their financial wellbeing by keeping the financial wellbeing conversation going in the workplace.
You don’t have to be an Aegon customer to use it – it’s available to everyone online. www.aegon.co.uk/wellbeing
Steven Cameron, Pensions Director at Aegon comments:
“When it comes to financial wellbeing, and the ten building blocks to success, our research showed that no two people are alike. Financial wellbeing is a very personal topic and that’s why we’re launching our financial wellbeing tool. People like to know where their strengths and weaknesses lie and how they compare with others like them. They also like to track how they are progressing or improving. Our new tool does that and most importantly, provides people with tailored information and relevant material to change their behaviours and improve their financial wellbeing both now and in the future.
“What we’ve found is that for most people, the biggest improvement they could make to financial wellbeing is to reframe the way they think about money – their ‘mindset’. It’s not always possible to make quick changes to your level of income or savings but by thinking about what sort of future you’re working towards, and the steps you’ll need to get there or by making more realistic social comparisons, you can make big strides towards a better relationship with your money.”
“The new Aegon tool offers more than a score, it offers support to bring your personal financial wellbeing to life so it can be a practical priority, every day, for everyone.”
TOP TIPS TO ADJUST YOUR MINDSET AND IMPROVE YOUR FINANCIAL WELLBEING
- Put happiness first. Be conscious of the things that give you sustained happiness – be that joy or purpose – and ensure that you are spending time, energy and money on those things with your future happiness in mind.
- Savvy social comparisons. If you’re making social comparisons, make them healthy and realistic, instead of comparing your finances to others whose financial lives appear better. Or even use your past self as a comparison to measure how far you have come.
- Picture your future self and lifestyle. Spend time regularly visualising your future self and what you might be doing. Paying attention to our future selves, the life we want to live and our pension and investment goals to achieve that lifestyle, can keep us on track.
- Make a long-term plan and write it down. People who write out a financial plan save more regularly and do better financially.
- Hold your nerve in a crisis. When tempted to change your long-term investments, remember why you started saving so you don’t panic and do anything you might regret. Using statements like, ‘Next time markets drop in value, I will remain calm and think of my long-term goals’, can prepare you for a financial crisis.
- How much money do you have left at the end of the month, after paying your bills?
- What’s the value of your long-term savings? (including your pension(s), stocks and shares ISAs and other long-term savings products)
- How many months could you maintain your current lifestyle if you lost your main source of income?
- What’s the net value of your home? (the value minus your outstanding mortgage)
- How much debt have you got? (excluding any mortgage and student debt)
- How much thought have you given to what gives you joy and purpose in life?
- How much have you thought about your future self?
- How many years does your written financial plan cover?
- How often do you compare your financial situation to others?
- How well would others grade your financial literacy?
*Overview of the UK population: April 2020, Office for National Statistics – MYE2: Population estimates: Persons by single year of age and sex for local authorities in the UK, mid-2019. https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/populationestimatesforukenglandandwalesscotlandandnorthernireland Number of people in the UK age 16 and over totals 54,098,971.
**The Financial Wellbeing Index was based on a representative survey of 10,000 people across a range of sectors, company sizes and job roles, carried out by Aegon UK.