THE role of mindset in financial wellbeing has been assessed in a study from pensions and investment company Aegon.

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 the population in the South West of England or around 833,922 people are fortunate to combine healthy finances and a positive money mindset, and this compares to 11% or 509,619 people who score poorly on both sets of factors (see lists below).

Action

But around five in six 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 people’s 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.

- 42% of the population in South West England have less than £100 left at the end of the month;

- 29% of people in South West England do not have any emergency savings;

- Just 10% of people in South West England pay more than the auto-enrolment minimum of 8% of qualifying earnings into their workplace pension;

- 49% of people in South West England have some form of unsecured debt which averaged £5,160;

- While there is a link between low incomes and money worries, more than half (58%) of average earners and more than one in three (35%) top earners say they worry about money.

What was clear from the study was that for most people 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.

Those in the lowest income bracket in South West England scored slightly better on mindset points than others in a similar position elsewhere in the UK. While those in the highest income bracket scored slightly lower on the money points compared to the UK average.

Common mindset problems

Lower mindset scores were a result of a number of factors including;

- 39% of people in South West England have only a vague idea of where they want to be financially in 10 years’ time vs 27% with a specific idea;

- 30% have only a vague sense of what gives them joy or purpose which are key elements of happiness;

- 88% of the population in South West England do not have a financial plan to achieve long-term goals;

- 11% of people in South West England frequently compare their finances to the finances of those better off than them with younger people far more likely to do so;

- Only 19% of people in South West England were able to answer at least four out of five basic financial literacy questions correctly.