Which financial planning activities give the biggest boost to mental health?

Canadian asset manager's survey reveals importance of keeping on top of finances

Which financial planning activities give the biggest boost to mental health?
Steve Randall

Maintaining good mental health relies on multiple factors, but one that ranks highly is having control of personal finances.

In a study to consider the link between financial planning and positive mental health, Bridgehouse Asset Managers asked 1,500 savers/investors with at least $25K in investable assets about their financial planning and mental health status to investigate the correlation and discover which activities give the biggest boost.

As part of an eight year research project and in partnership with the Canadian Mental Health Association (CMHA) Toronto and an advisory panel, the asset manager found that the more financial planning activities that are undertaken, the better the participant’s mental health.

Activities included calculating retirement requirements, calculating net worth, determining short-term goals, determining long-term goals, determining insurance requirements, establishing an emergency fund, creating a debt management plan, creating a budget, actively finding day-to-day savings online and scheduling regular meetings with an advisor.

Specifically, for those that did seven or more financial planning activities, 73% of respondents reported feeling in control of their financial situation, with the same percentage saying they have a sense of security about their financial situation. Eight in ten also said they felt able to bounce back from life’s tough challenges and the same share saying they have a positive mindset.

When dropping down to just three financial planning activities, the sense of security and control dropped to 52% and 54% respectively, with around seven in ten of this cohort feeling able to bounceback and having a positive mindset.

“It’s not about how much money you have, it’s about taking action and creating a plan for the future that leads to hope and mental well-being,” said Carol Lynde, president & CEO of Bridgehouse Asset Managers. “Financial planning should be right up there with diet, exercise and other recommendations for promoting positive mental health.”

Financial planning for mental health

The research found that three financial planning activities provided poll participants with the biggest boost to their mental health:

  • Establishing/maintaining an emergency fund
  • Scheduling regular meetings with an advisor
  • Calculating net worth

Having a written financial plan is important with 92% of participating investors who do saying their mental wellbeing is good, very good, or excellent.

“We in the financial industry believe we offer products and services that lead to better financial outcomes, but this research tells us we’re involved deeply in Canadians’ mental health,” concluded Lynde. “How do we deliver beter on this? One idea might be shifting our focus beyond the Know Your Client compliance requirement to financial plans. The research said that financial plans are extremely important to people’s sense of security and hope. Yet only 33% of Canadian investors have a financial plan.”