Financial wellbeing is defined as having a feeling of security and knowing that you have enough income to cover your basic needs. It’s about having control of daily finances and possessing the overall freedom to enjoy the life you lead.
There are three general ways in which financial wellbeing could be measured. One is the way that individuals manage their daily financial obligations, like a home mortgage, rental costs, and car expenses, as well as other immediate expenditures. Second would cover “rainy day” savings or the preparation of individuals in the event of some tragic or unforeseen financial burden. The third is long term goals, such as having enough for a comfortable retirement.
By being focused on your wellbeing financially, you could create your own individual journey towards being financially secure, as everyone has a different path in life. One could potentially become wealthy through their endeavours, but the overall process is based on yourself, your financial needs, and the steps you take to make your goals become a reality.
Factors that Impact Wellbeing
There are a variety of factors that could affect a person’s financial wellbeing both positively and negatively. By spending less than you earn, you are able to save for major expenses and future spending down the road. Borrowing correctly could also positively impact wellbeing, as it is very common for individuals to create credit card debt which they are unable to pay off. Another obvious factor would be boosting one’s earnings by creating a higher monthly income, either through your career or side gigs. Lastly, protecting the money you have is important, but learning to save and invest is just as important sometimes.
Many negative factors also impact financial wellbeing. This includes not having any long term goals, such as a retirement account or college fund for children. Overspending could also leave individuals in a major financial burden, as they begin to spend more than they make. In recent years, health insurance has also become a factor. Not allocating the proper resources to it could cost you a substantial sum on hospital bills. Lastly, not seeking professional financial assistance is another thing that negatively impacts wellbeing. There are many financial advisors out there whose job it is to help you budget and grow your money.
Link Between Financial Wellbeing and Health
A certain link has been proven in relation to financial wellbeing and health, both mentally and physically. Overall, poor financial wellbeing affects happiness in a negative way. One in four Australians do not enjoy life because of the way they manage their money, and one third say their lives are often or always controlled by their finances. People who stress over finances reportedly have high rates of anxiety, high blood pressure, migraines, ulcers, and even heart attacks. Sleep deprivation is yet another common factor with poor finances, as sleep greatly impacts both the mental and physical health of individuals. Families with financial stress in their households are more likely to cope by overeating, drinking alcohol, smoking, and leading a more “lazy” lifestyle. In addition, all of this could lead to depression, which could not only impact your loved ones, but also other people in the workplace. In terms of healthier individuals, they usually lead happier lives. These people have access to healthier foods and could have long term relations with personal trainers and fitness gyms.
Tips for Improving Financial Wellbeing
The following is a list of three tips and techniques you could implement into your own life to improve your wellbeing.
1. Write down your budget. Know your individual revenues, expenses, and spendable income once all daily expenses are covered. Be sure to speak with your spouse about your overall budget.
2. Avoid comparing income. Don’t compare your situation with peers or friends, as it reduces your satisfaction in life. Everyone has different priorities and enjoy different things. While one may enjoy travelling and spending money with friends, others may use that money to purchase a big house and more expensive car.
3. Look at the good things in life. Neuroscience has proven that the training of your brain could change the way you feel overall. By being grateful for what you have instead of worried, you could create a sense of happiness in your brain and overall being. Write down 3 things you are grateful for every day.