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.
Money isn’t everything, but money 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 wellbeing through a shift in mindset, a better understanding of money, access to better banking products, and a supportive 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 amount of stress you experience and improve your well-being.
Financial Wellness Definition
Financial wellness is a holistic approach to money and living but there’s no official definition shared by every single person or organization. I define financial wellness as doing more of what you love and more of what brings joy into your life.
And during my financial wellness road trips, we learned that people define financial wellness as having enough to live comfortably, experience little financial stress, and time to enjoy life. While organizations such as the Consumer Financial Protection Bureau defines it with “how much your financial situation and money choices provide you with security and freedom of choice.”
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 the 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 a healthy state of living one achieved “without simply avoiding sickness.”
Financial Wellness is Important and Why it Matters
Many have argued money isn’t important. Money cannot buy happiness. But money does play a significant role in our society. Money is the currency that pays for food, shelter, and medicine. It allows us the basic necessities to survive and the luxuries we enjoy.
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 is important because it recognizes that lack of financial planning and preparation leads to increase stress, mood changes, lower productivity impacting both our relationships and work performance.
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 money caused a great deal of stress. We either didn’t have much of it or stressing over how to make it grow. These money worries cause stress that impacts how we feel about our lives. Those feelings and thoughts impact our physical, mental, and emotional well-being.
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.
Improving Financial Health and Wellbeing
Your health matters so, therefore, financial wellness matters. The road to financial wellness includes 5 milestones–financial literacy, financial capability, financial security, financial independence, and financial freedom. Your journey to financial wellbeing isn’t about making millions of dollars. 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.
To reach a level of financial wellbeing, you must grow your understanding of money and enhance your financial skills. Tools to lessen your financial stress include:
- spending plans,
- debt-free mindset,
- multiple income streams,
- an emergency fund,
- investment strategy,
- and a retirement plan.
Next Recommended Reading: Get Started on Your Financial Wellness Journey