In this financial wellness guide, you’ll learn the key areas to improve your financial health and wellbeing.
My financial wellness journey began almost ten years ago. During an open enrollment period, my company was promoting health and wellness. There were programs aimed to deal with stress, weight, smoking cessation, but nothing related to money. Personally, I knew that employees were stressed about their finances. So I proposed an idea to create an employee financial wellness program. It was a success and over 10,000 employees attended.
In 2015, we set out on the road to turn local money conversations into a national conversation on financial wellbeing. During my road trips, we learned that people define financial wellness as having enough to live comfortably, experience little financial stress, and time to enjoy life.
Today, we continue that mission to empower you with knowledge, access, and community.
What is Financial Wellness?
Financial wellness is a state of healthy living through the active pursuit of financial knowledge, planning, and goal setting to live your best life.
And living your best life happens when you’re experiencing less financial stress. Stress is a normal part of life, but financial wellness aims to lessen the stress you experience related to money and improve your well-being.
In my book, You Only Live Once, I wrote: “I wanted people to understand that financial success-however you choose to define that success-only matters if you’ve found a balance between money and life. I used the term financial wellness to describe the state of living in which your well-being is measured by the quality of your life, not just by wealth.”
We’ve all had moments where our financials caused a great deal of stress. We either didn’t have much of it or stressing over how to make it grow. These worries cause stress that impacts how we feel about our lives. Those feelings and thoughts impact our physical, mental, and emotional well-being. And when we cannot meet our financial obligations, it causes stress leading to fatigue, absenteeism, lower production, higher medical cost, bad performance, anger, and a feeling of hopelessness.
Financial wellness aims for a healthier outlook on life. As a lifestyle goal, it’s about managing money today and planning for a future with less stress and a healthier lifestyle.
Financial Wellness Defined
Financial wellness is about your health and wealth. It’s about the overall quality of the life you’re living. It takes into account how you manage money and think and feel about your financial situation. While organizations such as the Consumer Financial Protection Bureau defines it as “how much your financial situation and money choices provide you with security and freedom of choice.”
There isn’t one definition of financial wellness. For me, financial wellness is defined as a holistic approach to money and living. It’s doing more of what you love and more of what brings joy into your life. But there’s no official financial wellness definition shared by every single person or organization.
To further define financial wellness and why it matters let’s separately define the words financial and wellness. The word “financial” relates to finances having synonyms: money, banking, and investments. “Wellness” is defined as being in a state of good health as an actively pursued goal. A New York Times article explained the word wellness emerged in 1650 as the opposite of illness. Wellness described as a healthy state of living one achieved “without simply avoiding sickness.”
Why it Matters
Financial wellness matters because it recognizes the lack of financial planning and preparation leads to increase stress, mood changes, lower productivity impacting both our relationships and work performance.
Many have argued money isn’t important and it cannot buy happiness. But money does play a significant role in our society. It’s the currency that pays for food, shelter, and medicine. It allows us the necessities to survive and the luxuries we enjoy.
Money isn’t everything, but it impacts most things. Whether we have too little or too much, money can often create stress and impact our health. Consider these questions: what feelings and thoughts come to mind about money? do you feel secure about your future? do you get anxious waiting for payday?
When we’re not in control of money, it controls our ability to live well too. Can you afford the much needed time off? Are you able to enjoy your favorite latte? Do you skip social and family events just to stick to a budget?
I believe people can achieve financial well-being through a shift in mindset, a better understanding of finances, access to better banking products, and a supportive community.
Where can you access financial wellness programs?
Fortunately, more employers are offering programs in the workplace. They partner with companies like phroogal, or Greenpath, Enrich, and larger companies like Prudential to offer seminars, workshops, and tools. But, you’re not limited to access financial wellness programs at work. Other examples include workshops offered by credit unions, community groups, and university associations. I’ve personally provided seminars and talks with these groups.
The Financial Wellness Roadmap
The road to financial wellness includes 5 milestones–financial literacy, financial capability, financial security, financial independence, and financial freedom. Your journey to financial well-being isn’t about making millions of dollars. It’s about taking into account how you’re feeling today as you plan for a better tomorrow.
The roadmap can help guide your progress and includes 5 stages:
Stage 1. Financial Literacy
Financial literacy is understanding the basics of personal finance, banking terms, and how money works.
Stage 2. Financial Capability
Financial capability is being knowledgeable and capable to make better decisions with your money.
Stage 3. Financial Security
Financial security is when your income is enough to cover your monthly expenses and debt obligations well into the future.
Stage 4. Financial Independence
Financial independence is reached when you have enough money to cover your basic needs and some luxuries too.
Stage 5. Financial Freedom
Financial freedom is the stage when you can be and live how you want without the trappings of finances. You’re living the life you choose.
>> Learn more about the financial wellness roadmap here.
Improving Your Financial Health and Wellbeing
Your health matters so, therefore, financial wellness matters. The goal is to achieve financial well-being – a state of healthy living – where you experience less stress related to money. Your outlook on life is positive. And your satisfaction is high. You feel well about where you are and where you’re headed.
It’s about making better financial choices through knowledge and planning. When you can manage your money and feel better about your finances, you’ll gain a sense of security and peace of mind supporting physical, mental, and emotional wellbeing.
At phroogal. my approach to financial wellness includes areas to manage, earn, grow, borrow, and protect your money. I refer to these as the elements of financial wellness. You can learn more with the following:
- Manage Money – Improve your money skills with budgeting techniques to save more and spend better.
- Earn Money – Better ways to earn more with your job, skills, and time.
- Grow Money – Make more money with your money through investing, real estate, and small business.
- Borrow Money – Become a credit pro and manage it to achieve your goals.
- Protect Money – Peace of mind in protecting your identity, insuring your life, and estate planning.
Get Started on Your Financial Wellness Journey
To improve your financial well-being, you’ll need to better understand your relationship with money and how it impacts your behaviors and habits. Your money beliefs influence your financial decisions and that’s where we need to start to create long-lasting change.
This is your financial wellness journey. It may be challenging at times, but the work you do will be life-changing.
- First, start with this short article on understanding your relationship with money to gain insights about some of your money beliefs.
- Second, start crunching your financial wellness numbers. These include your net worth, income, debt-to-income, credit score, and cash flow numbers.
- Third and finally, learn quick tips to mastering your money with 10 financial wellness tips to achieve success.
Achieve your financial goals
To reach a level of financial wellbeing, you must grow your understanding of money. Learn more about the following:
- spending plans,
- debt-free mindset,
- multiple income streams,
- an emergency fund,
- investment strategy,
- and a retirement plan.
Better your money skills
We all earn or make money to use it in some way to bettering our lives. The following skills help you understand how to raise financial awareness.
Saving is for everyone. It must be a priority in your life. We save money to make future purchases possible. It helps us afford our living expenses without being tied to a job indefinitely. Read more >
We make money to spend it. But the better you get at spending, the less you pay, and the more affordable things can become. Learn more >
Though investing can seem somewhat exotic if you’ve never done it before, the process is very basic. For the most part, you are saving money, but you are doing so primarily to grow it for future needs. Learn more >