STATISTICALLY, PEOPLE WHO HAVE FINANCIAL PLANS IN PLACE ARE LESS STRESSED THAN THOSE WHO DO NOT HAVE ANY DETAILED FINANCIAL PLANS
Heard of retail therapy? How about wealth accumulation therapy? A study conducted by Hoxton Capital Management surveyed 1,287 individuals aged between 30-50 suggests people who are consciously saving, as opposed to those who spend more frequently, reported that they are less stressed over the long run. Retail therapy provides a short-term ‘feel-good’ boost, whereas building a savings portfolio helps individuals feel more positive about the future and their financial security.
When asked about how they feel after going shopping, people expressed that they felt happy temporarily, however, when having an existing financial plan and an emergency fund in place, people reported that they were less stressed.
A prime example is the increase of individuals losing their jobs this year due to the pandemic. People who received professional financial advice, were noticeably more likely to have an emergency fund in place as well as other sources of income and investments, making their change of job status less stressful as they had a reliable back-up plan.
Many people do not like to discuss their finances with friends and family, as it tends to be a taboo topic within social situations. Those who have an outside source to discuss their financial situation with, such as a financial adviser, feel more confident about their financial future.
People who made financial decisions, such as completing pension transfers, without previously discussing this with a third-party, experienced higher levels of anxiety regarding the outcome of those decisions.
Interestingly, out of 31% (399 people) of people who reported that they were often stressed about their financial planning, 86% (343 people) of those reported not having a financial adviser in the past or present.