The day-to-day demands life brings have us juggling so many different things. Most of us find ourselves doing whatever we need to keep our heads above water. It’s no secret that in times of financial stress, we tend to use strategies that may seem good for one situation but can ultimately hurt our overall financial outlook. In addition, we can become blinded to our true financial well-being.
What Is Financial Well-Being?
Financial well-being is the current state of your financial wellness. Financial well-being is determined by how one can easily maneuver the financial situations in one’s life. Like how well they’re able to manage bills and expenses, pay debts, accomplish financial goals, and deliver on any unexpected emergencies. A healthy financial well-being brings a feeling of financial security and freedom. This has nothing to do with how much money someone earns but everything to do with how well they’re able to manage what they earn.
Healthy financial well-being is equivalent to the following:
- Having control over the day-to-day and monthly finances life brings
- Having the ability to manage financial emergencies easily
- Having the financial freedom to make the choices that enable you to enjoy life as you want
- Being on track with your financial goals
How Financial Health Affects Overall Health
There are several factors that impact your overall health, and they are mental, physical, spiritual, and financial. So, your financial well-being plays a significant role in your overall health. Financial stress that lingers over a period of time can lead to issues that can impact your overall health. Some of those issues include:
- Not being able to sleep
- Stress and anxiety
- Weight gain or a loss of weight
- Drug abuse
- Poor food choices
- Weakened immune system
- Chronic medical conditions
In addition, when people feel they can’t afford medical care, they tend to neglect medical appointments. This causes them to delay routine care or not get the preventative care needed so that medical conditions don’t become more severe. Therefore, finding a path to better financial well-being is extremely important.
A Path to Better Financial Well-Being
Some of the things you can do to get you on a path to better financial well-being are:
Seek emotional support from friends and family or a therapist. You could also seek the guidance of a financial planner to help you develop an overall strategy to better your finances.
Utilize programs offered by your employer. Some employers offer employee wellness programs that promote mental and financial health.
Save money wherever you can. Only buy what you need. In addition, you want to save for emergencies by having up to six months of living expenses set aside.
Start a budget. This is important so that you don’t overspend. You can do this by calculating your income and expenses, determining your goals, and how much you must put aside for them monthly. Anything left over should go toward your savings or debt.
Start a plan to pay down your debt. Ensure your budget includes monthly allocations that pay down your debt every month. Eliminating debt is a big reliever of stress and opens the door to improving your financial well-being.
Plan for retirement. It’s never too early to start planning your retirement. In fact, the earlier you start, the better. Establish your retirement goals and begin the path to making it happen, starting with options your employer may provide.
Monitor your credit. Regularly check your credit report and score to ensure information accurately reflects you. Pay your bills on time to help in raising your score.
What’s Your Financial Well-Being Score?
If you’re unsure about the state of your financial well-being, there’s a way you can know, and it only involves answering a few questions about yourself. The Consumer Financial Protection Bureau has developed a way to measure your current financial well-being. Whatever your score, regularly practicing the steps above will only help to improve it.
The Bottom Line
You’re not alone if you’re feeling stressed about your financial situation. Most adults (nearly 72%) also feel the stress, and about 25% say they experience extreme stress about money. Starting the path toward better financial well-being is the key. As you put these practical steps in place on a regular basis, you’ll notice how they greatly impact your finances in a positive way.