What’s inside this article: Answering the questions – what is financial wellness? This includes the benefits of achieving financial wellness and tips for gaining control of your day-to-day expenses while saving for the future.
For many people, finances are their primary source of stress. Managing your finances and building financial security have real health benefits because, as most of us know, too much stress is harmful to our health.
But what is financial wellness? – it’s not just the absence of money-related stress. Financial wellness is more than that.
What Is Financial Wellness?
Financial wellness means:
- Having control over your day-to-day finances.
- The ability to cover an unexpected expense like a car repair or home repair.
- Being on track toward your long-term financial goals, like retirement or purchasing a home.
- Having the financial freedom to make choices that help you enjoy life.
Benefits of Achieving Financial Wellness
Having enough money to do the things you want to do and not routinely worrying about money provides a sense of security.
That security lets you enjoy life more; you can live in the moment and enjoy the smaller pleasures in life, for example, stopping for ice cream with your kids without pausing to think about the financial impact.
Achieving financial wellness gives you freedom. This means freedom from financial stress, freedom from worry about unexpected expenses or debt, freedom to make choices about your life.
It’s scary to feel stuck somewhere – whether that’s an unhappy relationship or an unfulfilling career. Financial wellness empowers you to make those changes in your life that are impacting your well-being and happiness.
There are many ways financial wellness improves physical and mental well-being.
The main health benefits of financial wellness are a result of reducing stress:
- Sleep better
- Control your weight
- Get sick less often
- Feel better faster when you do get sick
- Less muscle tension
- Be in a better mood
- Get along better with family and friends
It’s Not About Being “Rich”
Achieving financial wellness doesn’t mean getting rich.
Being able to meet your basic needs while saving for the future and still having enough money to enjoy your life is enough to reduce money-related stress significantly. Maybe even eliminate it.
Maslow’s Hierarchy of Needs
One of my favorite psychological theories to reference, and the perfect explanation as to why you don’t need to be rich to be happy.
Maslow’s Hierarchy of Needs is a motivational theory in psychology that depicts human needs at different levels within a pyramid. The theory states that humans must achieve the needs in the lower levels of the pyramid before achieving higher needs. Motivation increases as needs are met.
Financial wellness can definitely help you reach your self-fulfillment needs. Finances are often a barrier for people at various stages of the hierarchy. But, having an excess of wealth has minimal effects on happiness because psychologically, after achieving self-actualization, there isn’t anywhere to go beyond the point.
Achieving Financial Wellness
If you’re currently struggling financially, the idea of gaining control of your finances, paying debt, saving for the future might all sound like a pipe dream.
Rather than looking at the big picture and feeling like you have no control, creating small goals in the right direction lets you achieve small wins and feel more accomplished and motivated.
Everyone’s financial situation is different. However, making small gains in the following areas can help you get on the right track to achieving financial wellness:
You need to know where your money is going.
How much money is coming in each month, and how much are your set expenses? There are different ways to budget, so find the best one for you.
These budgeting tips can also help you find a balance between saving, paying debts, and enjoying yourself now.
Create a separate saving account for your emergency fund. This fund should stay separate from your other savings. Add to this fund every month, even if you can only afford $10. Just make a point of adding something.
The more your emergency fund grows, the less stress you will have about unexpected expenses.
These savings are not the same as your emergency fund – this is your personal savings for the future.
You may want more than one type of account for this – A retirement plan such as a 401(K) Plan, and also, a high-interest savings account for savings for things like travel, so it’s easier to access that money when you want it.
Set a monthly goal and start putting money into this account every month. It doesn’t matter how much you can afford right now; what matters is that you’re saving something. You may decide to save a specific amount or a percentage of your paychecks, depending on how you’ve decided to budget.
Understand & Monitor Your Credit Score
It’s essential to know your credit score and understand how credit works.
You should know what things negatively and positively impact your score, and you should regularly monitor your credit report to make sure everything on your report is accurate.
A credit monitoring app like Borrow Well or Credit Karma can help you achieve this.
Thinking about your financial well-being can feel quiet overwhelming if you’re currently dealing with a lot of financial stress.
You can reduce your stress and start feeling better by taking small steps towards your financial goals. Getting control of your budget, saving something no matter how small, and monitoring your credit score will help you achieve small wins, boost your motivation, and lower stress.