For the last year, inflation has been high. If you’re worried about the effects of the rising cost of living, this guide could help you.

Figures from the Office for National Statistics show, in the 12 months to April 2023, the rate of inflation was 8.7%. This is far above the Bank of England’s target of 2%, and for much of the last year, the rate has been in double digits. 

The guide explains why needing to spend more to maintain your lifestyle could affect your long-term plans and how inflation could reduce the value of your assets in real terms.

You can also discover some of the steps you could take to “beat” inflation, including:

1. Making the most of suitable allowances
2. Shopping around for the best interest rate
3. Considering if investing is right for you
4. Reviewing your budget
5. Focusing on your long-term plan.

Download your copy of ‘How to manage the harmful effects of inflation on your wealth’ now to learn more about the effects of inflation and what steps you can take to “beat” it.

Everyone has heard the saying “money can’t buy happiness”, but research suggests it’s not accurate. 

According to a study from The Greater Good Science Center in the US, spending money can boost your wellbeing. However, simply heading to the shop and splurging on the latest technology or new clothes doesn’t yield the same results. Instead, you need to intentionally spend money on experiences and things that support your goals.  

The research found people are happier when they spend money on experiences, like travelling or going out for a meal, rather than possessions.

More than 450 participants took part in the study. They were asked to describe something they had spent money on in the last three months between $60 and $1,200, excluding everyday bills. Participants were then asked to explain how the purchase helped fulfil different goals and how they felt it contributed to happiness and life satisfaction. 

The results show there was a clear difference in how spending affected wellbeing if it was driven by intrinsic goals.

Intrinsic goals are about improving yourself and they come from your passions and values. They could include improving your health, learning new skills for personal growth, or building meaningful relationships. As a result, people usually have strong internal motivation to pursue intrinsic goals, and the rewards when you reach them can be much stronger. 

In contrast, extrinsic goals are motivated by external influence, for example, to improve your social status. So, if someone splashed out on the latest car to keep up with the Joneses, it would be an extrinsic goal. 

The research found that money can buy happiness if it’s used to pursue intrinsic goals. 

So, next time you’re spending, you may want to consider how it will contribute to your overall wellbeing. 

3 ways to spend intentionally and improve your wellbeing

When you think about getting the most out of your money, a bargain deal or finding the best interest rate may come to mind. Yet, the research suggests looking at it from a different perspective – how could the money be used to improve my happiness? – may be valuable. 

Here are three ways to spend intentionally. 

1. Set goals that are personal to you

The research suggests goals are a crucial part of getting the most out of your money in terms of wellbeing. So, take some time to really think about what you want to achieve in your life. Focus on what you value most now and what you’d like to improve. 

For instance, you may want to complete a qualification to improve your job prospects, spend more quality time with grandchildren, or visit some bucket list destinations. 

Consider questions like: 

• What are you passionate about?
• What projects are important to you?
• What goals do you need to reach to secure the lifestyle you want?
• Who do you enjoy spending time with?

Defined intrinsic goals can give your decisions and spending a clear direction. 

2. Pause before you make a purchase 

Next time you’re buying something that isn’t essential, ask yourself: why do I want to buy this? Will the purchase support your goals, or will it make you happier in the long run?

Delaying purchases, especially for big-ticket items, can curb impulsive spending based on extrinsic goals. It means you have time to reassess whether the spending is a good decision for you. In some cases, a small delay will mean you realise there are better uses for your money. And when you do decide that it’s a positive purchase, you can feel more confident that it’ll support wider aspirations. 

3. Be aware of extrinsic influences 

Everyone is affected by extrinsic goals at times. Perhaps you want to update your phone or TV after friends have done the same thing. Or you may be eager to see a new show at the theatre after a colleague said it was a must-see, even if it’s not something you’d usually be interested in.

Being influenced by outside factors is normal, and it’s not always a bad thing – maybe you’ll really enjoy that show your colleague recommended.

However, being aware of when you’re spending to meet extrinsic goals can help you get the most out of your money. It can be an opportunity to step back and consider what’s driving your decisions.  

Do you feel like you’re burnt out, or don’t have enough time? If you do, you’re not alone. Research suggests a modern habit of changing activities more frequently could be partly to blame. Read on to find out more. 

In 2019, the World Health Organisation recognised burn out as an “occupational phenomenon”. According to Mental Health UK, common signs of burn out include:

• Feeling tired or drained most of the time
• Feeling helpless, trapped and/or defeated
• Feeling detached or alone in the world
• Having a cynical or negative outlook
• Self-doubt
• Procrastinating and taking longer to get things done
• Feeling overwhelmed.

So, what’s causing the growing trend of burn out? A study by Onward suggests it may not be the factors that first come to mind. 

While the report found that many people said they feel too busy or tired to participate in important leisure or social activities, it suggests three commonly cited reasons are “myths”:

Myth 1: We’re getting less sleep

Lack of sleep is a common complaint. Yet, the research found that people are sleeping by around 30 minutes more a day when compared to four decades ago. 

Myth 2: We are working more

While work does take up a significant portion of time for many people, overall people aren’t working longer hours. Since 1974, men’s working hours have decreased by 2%. Women’s working hours increased by 13% over the same period, reflecting the fact that more women are now working full-time.

Myth 3: We are more rushed

It’s a common saying that modern life is fast-paced. However, the share of people reporting they are often rushed has fallen in the last two decades from 20% to 17%. 

If tackling burn out isn’t as straightforward as getting more sleep or reducing working hours, what is the solution? The study suggests a modern lifestyle habit is playing a role. 

The report links rapid shifting between activities to burn out

The report suggests that people are now more likely to rapidly shift between activities. It argues the breakdown in the distinction between different types of time and activities is leading to a rise in burn out as it can make people feel overwhelmed. 

In 1974, the average man changed activity 18 times a day, yet by 2014 this had almost doubled to 31. For women, activities increased from 23 to 37. 

The report adds that multitasking through fragmentation, where you break up activities to do something else, “creates a stronger sense of time pressure and reduces the quality of activities”. 

Fragmentation could mean you’re less productive at work as you are jumping from one task to another without completing them.

It’s a habit that can spill over into your personal life, too. On weekends in 1974, the average person would spend just over five hours on leisure activities, broken down into four episodes, a day. In 2014, not only do people spend an hour less on leisure time, but it’s also broken down into seven episodes.

Breaking down leisure activities could mean you don’t have an opportunity to fully relax and enjoy what you’re doing. 

3 useful tips that could reduce burn out

With the findings of the study in mind, thinking about how you use your time and focus on different activities could be useful. Here are three simple tips that could improve your mental wellbeing. 

1. Reduce how much you’re multi-tasking: While multi-tasking can be useful sometimes, it can also mean you don’t give activities the attention they deserve, and it’s not always more efficient. If you find yourself doing more than one thing at a time, ask yourself if it’s the best approach. 
2. Schedule time to relax: If you find that you’re always busy and don’t have time for yourself, make it part of your schedule. Even just 30 minutes in the evening doing something you enjoy could be beneficial. As well as reducing burn out, it could boost creativity, concentration, and motivation. 
3. Put the technology away: Reaching for your phone when you’re watching TV or catching up with friends is common – 17% of people said they use technology while doing leisure activities. It’s easy to do without really thinking about it. So, when you want to focus on a task, put the technology away to minimise distractions. 

If you’re part of a blended family, it can make some decisions more complex, especially when you start to consider how to pass on wealth and provide for the people that are important to you. Don’t ignore the potential challenges, as being proactive could improve the financial security of you and your family. 

Data from the Office for National Statistics estimates that around a third of families are blended. It’s becoming more common for people to remarry, have children from a previous relationship, or play an important role in the lives of stepchildren. 

Despite it being something a third of families need to consider, it can still make long-term financial planning more complex. A tailored financial plan can help ensure that your assets would be distributed in a way that suits your wishes. 

Among the steps you should consider taking are these four. 

1. Clearly set out your goals 

It’s difficult to make suitable financial decisions if you aren’t sure about the outcomes you want to achieve. So, your first task is to clearly set out your goals – who do you want to support financially now or in the future? What are your biggest concerns?

You should consider what you’d like to happen in different scenarios to ensure all beneficiaries would be covered. 

A chat with your partner, children, or other people that may be involved in your estate plan could be useful here. 

2. Consider how you hold property with your partner 

Your property is likely to be one of your largest assets, so it’s essential you understand who owns the property and what would happen if you passed away.

If you own the property with your partner, there are commonly two ways it can be held:

1. Joint tenants: If you pass away the property would automatically go to your partner. 
2. Tenants in common: Your proportion of the property would go to your beneficiaries when you die. 

Deciding who you’d like to inherit your property can be difficult, but it’s important.

If you have children from a previous relationship and want to pass on property wealth to them, tenants in common could suit your needs. However, you may also want to take steps to ensure your partner could remain living in their home during their lifetime, which you can include in your will. 

Depending on how you share assets with your partner, you may also want to review how savings, investments, and more are set up. 

3. Review your current will 

Writing a will is the only way to ensure assets are passed on according to your wishes. As your circumstances or plans may change, it’s a good idea to review it every five years and after major life events.

One important thing to note is that getting married would revoke a will you’ve previously written. So, while you may have a will stating that you’d like your children to be your main beneficiaries, this wouldn’t be binding if you remarry.

While you can write your will yourself, seeking legal advice is often useful, especially in blended families where wishes are often more complicated. 

You can use your will to set out who you’d like to inherit certain assets or a portion of your estate. As mentioned above, you could also specify things like your property will go to your children, but your partner must be able to continue living there until they pass away. 

4. Consider if a trust could suit your needs

A trust allows you to have more control over how an asset is used and passed on. They can be a useful way to create long-term financial security for loved ones and ensure your wealth remains with your family. 

You may choose to place assets in a trust on behalf of a child, who would be able to access them once they reach a certain age. Or you could set up a trust to provide an ongoing income for your beneficiaries, but they wouldn’t be able to sell the assets it holds.

There are several different types of trust and many different ways to use them to support your goals. If you are considering using a trust to pass on some of your wealth, taking both financial and legal advice can help you choose the option that is right for you. 

Involving your family in the financial planning process could be valuable 

When you’re creating a plan to ensure your family would be secure, communication is important.

It can help ensure your loved ones understand your wishes and that you’re all on the same page. It may also be important for your family’s decisions. For instance, knowing what they stand to inherit could change the steps they need to take to be financially secure in the future. 

So, involving your family in the financial planning process can be valuable. That doesn’t mean you have to share all the details of your financial plan with them if you don’t want to. However, an open conversation about money and goals can be useful for everyone involved. 

If you’d like to discuss your finances and how to create financial security for your family, please contact us. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate will writing or estate planning.