What Exactly Is Financial Wellness And How Can I Achieve It?

The holistic “Wellness Trifecta” includes physical, mental and financial wellbeing.

Photo by Fernando Brasil on Unsplash

The pandemic has inspired many of us to reassess our overall wellbeing and make self-sufficiency a priority.

But there is one component of the wellness triangle that is often overlooked: financial wellbeing.

Financial wellbeing is the third part of holistic health, with the first two being physical health and mental health.

So what exactly is financial wellbeing? And how do you know if you are doing well financially?

Here are five key indicators that you have reached a state of financial health.

1. You are prepared for emergencies.

Almost half of Americans would be unable to cover a $ 400 emergency. This lack of savings worries many people. Whether it’s a medical emergency, unexpected expense, job loss, or property damage, things happen and it is wise to be ready on time.

Ideally, you want an emergency fund that will cover at least six months of your living expenses. With this financial insurance in your savings account at all times, you don’t have to worry about being unprepared.

When you’re just starting out to save money, worry less about the long-term goal of a six-month emergency fund and more about how to get there. Start small by setting your first milestone, e.g. B. $ 500 and determine the amount of money you can contribute each month to help reach that mark. Once you hit your first milestone, set your next one and keep climbing until your goal is fully met.

2. Your spending habits support your values.

Every dollar you spend should bring you closer to the person you want to be. To do this, you need a budget that is aligned with your personal values ​​and goals.

A spend analysis is a great first step that we take with our customers at OneEleven to help them learn their values. This includes reviewing everything you spend money on over the week and evaluating how happy you are with each purchase. The goal of this exercise is to identify the types of purchases that bring you joy and positively enrich your life.

You will also find out what is causing guilt, stress, or negative feelings. Once you have this knowledge, it’s much easier to eliminate these types of purchases and focus on using your hard earned money in a deliberate way that makes you happy.

3. You feel in control and confident in your decisions.

When people say, “I’m not good with money,” it usually just means that they haven’t had the time or opportunity to develop their personal financial skills.

Successful money management is like riding a bike, playing the piano, or any other skill. The key to having confidence is learning what to do and consciously practicing until you get it right. When we feel inexperienced or don’t know how to do something right, it is impossible to feel in control.

The reality is that you will likely have to make money decisions almost every day for the rest of your life. Investing in your financial education and taking the time to put that knowledge into practice today will save you a lot of stress and money in the decades to come.

4. You stay on track towards your future goals.

Identifying clear, specific goals that inspire you is a critical step on your path to financial wellbeing. Write down what you want to achieve, when you will need the money, and how much you will need for each goal. Then save and invest each month towards those goals and track your progress along the way.

They know you are on the right track as you move closer to your most important goals each month. Other important indicators that you are on track financially are that your annual savings rate and net worth are increasing over time.

Investing also plays a big part in staying on track. While nearly half of Americans don’t invest in the stock market, investing is the only way most of us can amass the more than $ 1 million we need to comfortably retire.

5. You are free from financial stress.

Money is the number one cause of stress for most adults, but it doesn’t have to be. Instead, you can be in control of your money. You will know that when you are no longer stressed about money on a regular basis, you will be fine financially.

Financial stress comes from many different things. When you finally run out of credit card debt, when you have a safety net to make sure your loved ones are always taken care of, or when you’ve designed a financial plan based on you and your values. Imagine how it will feel when this is accomplished and let it motivate you to reach a state of financial health.

To become a holistically healthy person, there should be a balance between your physical health, mental health, and financial health. By creating a realistic spending plan, building healthy money habits, and investing in your future, you can break the unfortunate spending cycle, avoid debt, and increase your happiness by being confident about your financial situation.

Comments are closed.