MIND AND MONEY: Healthy? Why your bank balance will be too

Written by Rebecca O'Connor on 1st March 2017

If you are a devotee of the Hemsley sisters, never go anywhere without a Fitbit and Sweaty Betty is your second home, then congratulations – you are also likely to be financially fit, too.

A study has identified a strong relationship between health and financial position. According to Momentum UK and the University of Bristol, people in poor health are much more likely to fall behind on bills and have very low levels of savings. They are less able to afford lifestyle expenses, such as holidays and socialising.

And this is the important bit – this is true even after factors such as income and social class have been accounted for. So that means the reason people in poor health are bad at managing money is not just that they have less of it; and the reason they are in poor health might not be just because they are on low incomes.

As someone who has just invested in a Nutribullet, signed up for a six-month family bootcamp membership, registered for a 10-mile run in June AND set up a new Vitality Health insurance family policy (more below), I’m rather keen to find out…

Sweaty Betty wearers – good at rocking leggings and managing money

… Is good health the chicken or the egg?

Good health is linked to better financial management and the suggestion is that this is because of behaviour, things like discipline, self-control, positive attitudes and an understanding of the benefits of keeping good habits.

This begs the question: could adopting a healthy lifestyle help you improve your finances, or could taking control of your financial situation lead to better health?

There are direct and indirect ways that improving health can improve money management and vice versa. The clearest example of a positive correlation being acknowledged by a financial services provider is Vitality Health, a health insurer that offers you reduced premiums and points for money off things like gym memberships and cinema trips, the more exercise you do. Money savings: the ultimate carrot for better fitness? Vitality has proven hugely popular so far, with members reporting that they become addicted to monitoring their health and competitive about earning the points.

Less directly, the better your diet, the more you are likely to save on the shopping bills (cutting out meat is one of the most financially prudent changes to your diet you can make, according to this research). And if you prioritise activity, over, say, shopping trips and meals out, you will also be saving money simply by avoiding the temptation to spend it.

The Financial Wellness Index, constructed by the University of Bristol’s Personal Finance Research Centre, assesses key elements of a person’s financial life, combined with measures of the UK’s macro-economic state, to produce an overall Financial Wellness score out of 100 for the country.

Health is a consistent theme. Around one in six people (17%) who class their own health as ‘poor’ have missed a bill payment in the last 12 months, more than three times the proportion who rate themselves as being in excellent health (5%). Similarly, one in ten people (11%) with a poor diet have missed such a payment, twice the proportion of healthy eaters (5%) who had done so in the last year.

There was also a clear correlation between physical wellbeing, diet and savings. For example, those in poor health (15%) are twice as likely as those in excellent health (8%) to have no money saved for a rainy day. And while one in five (19%) healthy eaters have less than £100 in savings, this figure climbs to almost one in three (29%) for those with poor diets.

The shortfall in savings appears to be having a knock-on effect on standard of living. Of those in poor health, two in five (42%) have had to cut back on lifestyle expenses such as holidays or socialising in the last year, but for those in excellent health, this drops to around one in five (23%).

Samantha Seaton, MD of Momentum UK, said: “Becoming financially well is not something that can be achieved overnight, it’s a personal journey for most, that will take a level of commitment, honesty and reflection. The link between financial and physical health is strong in this year’s index, which is not wholly surprising when you start to analyse the similarities in behaviour needed to achieve both. Whether you’re improving your fitness or trying to improve your financial picture success will be found by taking small steps to achieving your longer-term goals.”

Professor Sharon Collard, director of the Personal Finance Research Centre, University of Bristol, said: “Navigating the financial maze that we live in can be an extremely daunting experience, especially as most people receive little to no financial education in their childhood, teenage years and early twenties. The economic instability of the last decade has made the job of managing one’s finances all the more difficult, which is why now more than ever, it’s important that we have a thorough understanding of the financial health of UK households.

“In the last year, against expectation, we have seen a slight improvement in the UK’s overall Financial Wellness, but there is still significant ground to be made, particularly when it comes to the average household’s savings provision. This could be a growing concern in the coming months if wage growth remains slow, while inflation picks up.”

How does the UK fare overall?

Today’s Index gives the UK population a Financial Wellness score of 69, two points higher than last year.

With an overall Index average of 69, the typical UK adult falls into the ‘Financially Exposed’ group, indicating that while they have a relatively comfortable standard of living, they are susceptible to financial harm in the event of unexpected economic shocks, both on a micro-scale, such as job loss or illness, and on a macro-scale, for example a fall in house prices.

At the bottom end of the scale, one in 40 people currently fall within the ‘Financially Distressed’ group. This portion of the population score very poorly on the Index (less than 45 points) and are likely to face poverty and deprivation in their day-to-day lives. Overall, the extreme groups, ‘Financially Distressed’ and ‘Financially Well’, have decreased in size in the last year, showing a convergence to the ‘middle ground’ – Financially Exposed.

To find out more and get your own Financial Wellness score visit:

https://www.momentum.co.uk/