Do we need to be stressed into saving for the future?

The link between money worries and mental health is clear. Day to day financial issues take an enormous toll on our emotional and mental wellbeing, and one in six people have suffered mental health issues as a direct result of money concerns. However, a new piece of research suggests that adding a bit more stress could be useful for some people. How could that possibly be the case?

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The research has been released by Scottish Widows as part of Mental Health Awareness Week. The company takes the link between money worries and mental health very seriously. It found that nearly half of people say financial worries regularly impact their personal relationships and affect their ability to sleep, with one in ten having their sleep hampered nightly.

It doesn't for a minute suggest adding to these people's challenges by stressing them out even more, because the last thing people need when they are in this position is another worry.

Who needs more stress?

However, for those who have a balance in their current financial situation - and are not suffering sleepless nights - its research found that raising their stress levels slightly for three minutes could benefit them in the long run.

Behavioural psychologist Jo Hemmings observed volunteers aged between 35 and 45 as they watched films illustrating two opposing retirement situations. The first film painted a happy picture of retirement, while the second film drove home the financial hardship and unhappiness of poverty in later life. Wired up to oximeters that measured their pulse rates, the scientists monitored signs of relaxation and stress, including facial movements and body language.

An overwhelming majority of participants demonstrated clear signs of stress, including body twitching, uncomfortable fidgeting, crying and increased pulse rates, while watching the video highlighting the effects of not having adequate money for retirement.

After watching the films, the researchers asked the volunteers about their own retirement savings, and 78% said that the video had made them worried about how much they were saving towards retirement and their own financial prospects later in life.

But what was most surprising was that it took just 3.5 minutes of footage to make 90% of participants say they would review how much they are saving towards retirement. On average, the impact of the video resulted in participants pledging to increase their monthly pension contributions by an average of between 2-5%.

Hemming said: "This kind of situation suggests that prior to the experiment the vast majority of participants had given little or no consideration to the financial reality of their retirement. Yet the stress they demonstrated showed that they did identify with aspects of the film they watched, and this created fear that it would become their reality unless they took action to do something about it."

"Denial of a situation that feels too distant in the future can create a false sense of security that prevents people taking action to resolve it. This is certainly true of retirement planning. The purpose of putting money away for a distant older life can feel too abstract and unreal in younger life and can therefore be ignored. But this study shows that the smallest injection of reality, in this case a short video, can change people's priorities and mind-set."

What can you do?

Scottish Widows suggests, therefore, that anyone who feels sufficiently on top of their day-to-day finances should take the time to consider the future. You can start by visualising your ideal retirement – what do you really want to do or get out of retirement and how much money will you need to set aside to cover it? Then use financial calculators to understand what your pensions savings may translate to in the form of a weekly income in retirement – and assess whether you are saving enough.

If you need to save more, it's worth reviewing your current income and outgoings, to see whether there is any room to put more money away for the future. That way you can increase your monthly savings to the kind of level you need for the retirement you want.

Of course, even once this is done, it's essential to revisit your plans regularly to ensure you are still on track, and if you have any concerns about making a big decision like this on your own, seriously consider a consultation with a financial adviser to get you on the right track in plenty of time.