At the thick of the 2020 pandemic, many of us were inspired to assess our mental, emotional and physical wellness but there is an important part of the wellness group that is frequently overlooked, and that is financial wellness.
Financial wellness is a concept that has gained popularity in recent times and can be practised by anyone, regardless of your financial situation.
Many of us are aware of what it takes to achieve wellness in other areas such as spiritual or physical but have never considered what it takes to be financially well.
Financial wellness, like any other wellness programme, requires commitment and hard work.
Let’s Dive in
What exactly is financial wellness?
Financial wellness is essentially the overall health of your financial life, as well as how it interacts with other aspects of your life and well-being.
Financial wellness is very personal which means that what it means to me will be very different from what it means to another person.
The reason is because we are at different stages in life and there are many components of financial wellness.
In order to personalise financial wellness ask yourself
- what are my money beliefs?
- How do I feel about money?
- Am I grateful for what you have?
- What is my dream life like?
- What inspires that dream life?
- What brings me happiness and cheer in life?
- How can I live that life now as I move towards my goal?
- How well do I manage my money?
- Am I prepared for an emergency?
- Am I working to meet your short and long-term financial goals including retirement?
There are many more questions to personalise this
Financial wellness is about striking a balance; it is about being more mindful, staying on top of your finances, and working towards a life that you enjoy.
Is there a distinction between financial wellness and financial literacy?
The answer is unequivocally yes. Financial wellness differs from financial literacy.
Financial literacy is the ability to understand financial matters, which implies knowledge or education. Financial literacy is only a part of financial wellness
While financial wellness is the application of financial literacy to complement and elevate all other aspects of wellness.
Financial wellness takes a more holistic approach.
Why is financial wellness so important?
We are people with emotions, past experiences, belief systems, and so on not robots, spreadsheets, or computers.
These other aspects of our being plays a significant role in our unique make up and also affects other areas of wellness including finances
Here are some of the advantages of financial wellness.
1. It encourages self-reflection: Financial wellness, like any other wellness programme, is effective when we take a deep dive into our being with the goal of understanding and applying new knowledge, thereby making informed decisions that will have a positive outcome.
2. Money becomes a servant rather than a master: The right relationship with money is one in which it is a servant rather than the master. Money is meant to serve us.
Money was created for humans and not humans for money.
When we keep the purpose of money at the forefront of our minds, money finds its rightful place.
Money is not an end in itself. It serves as a means to an end
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3. You make more informed decisions: This is only possible when you have a clear picture of your financial health and how it relates to all other areas of your life both at the short and long term
4. You develop better financial habits: Habits have a significant impact on our present and future. We can argue that our habits are more important than our income
For example, the habit of planning or budgeting will serve you irrespective of yourincome
5. Less stress: We all know that money can be a source of stress, and numerous studies back this up. Investing in your financial health will ease financial stress.
6. Increased productivity at work and life: According to research, there is a direct link between financial wellness and workplace productivity.
Employees who are under financial stress are less productive
What does financial wellness means for you
Everyone’s financial situation is different and as i have said personal finance is very personal
For example, financial wellness meant different things to me when I was single, to when I married, and it means something different again now that I have a baby and own a home.
This means you should always reassess your financial situation, especially after a major event or before the event occurs if you are aware of it.
Regardless of its personal nature, there are some financial wellness principles that apply to everyone.
1. Determine your starting point: It’s difficult to make any progress or even know if you’re making any if you don’t know where you’re starting from.
Getting a financial audit is a simple process. Read our blog post for more information.
In addition to this activity, consider the following.
- What is the most important thing to you?
- What is not important?
- What are my values?
- What are my strengths?
- What are my weaknesses?
- Where do I see opportunities?
2. Think about your goals and dreams: After you’ve assessed your starting point, the next step is to consider the future.
Why? Because it will direct your actions and financial decisions today, allowing you to achieve your goal and dream. This also gives you an idea of how much it will cost.
Your dreams and goals come at a cost. Calculate the cost.
3. Have control over your day-to-day finances: This includes planning (budgeting) your expenses and tracking that plan consistently.
This habit will provide you with insights into your spending habits, allowing you to make changes as needed
The ultimate goal of being in control of your daily finances is to live within your means.
How to budget in 6 simple steps
4. Protect your household against disaster: Protection is rarely discussed, but it is critical.
As much as you can control your finances, there are many things in life that you cannot, such as a global shutdown caused by a pandemic.
There are basically two ways to protect yourself against most types of disasters. Getting insurance and building an emergency fund
Do your research on how much insurance you need, with emergency funds the rule of thumb is to have between three to six months worth of expenses
Emergency Fund: Everything you need to know
5. Getting out of debt: Debt is a fact of life for most people, rich and poor alike, but there is good debt and bad debt.
You must avoid bad debt (characterised by high-interest rates and/or used to purchase depreciating assets) and manage good debt if you must obtain it.
How to pay off debt fast even on a low income.
6. Investing and saving: This is not a luxury or something reserved for a select few. This is something that anyone, regardless of income, can do. Depending on the current situation, the percentage will vary.
Investing in Index Funds for beginners
7. Kaizen: This is a Japanese word that means continuous improvement. it’s the idea of improving every day, even if only a little bit.
Continue to read, work on your mindset, and take action
8. Give: Giving is usually not given the attention it deserves and it might sound counterintuitive depending on where you are financially but giving is a powerful tool that affects other areas of your life
Identify a cause or organization that aligns with your values and make a commitment to give no matter how small.
Bottom Line
Why won’t you invest in your financial wellness? Financial wellness is an area that should not be overlooked, and it is attainable for all if you are willing to take action.
