Financial wellness encompasses more than just the management of your money and expenses – it also extends to your attitude and relationship with your finances.
Chances are you have thought about how much money you have (or possibly in some cases don’t have), what your expenses are, and how much you have saved and invested.
But have you given any thought to your financial wellness?
I was initially introduced to the term a few years back at a conference on Financial Wellness and Retirement Readiness. At the conference, Louis Theriault, the Vice President, Industry Strategy and Public Policy for The Conference Board of Canada kicked off the conference with an introduction to the concept of financial wellness and why this topic was important.
Louis identified that there were two areas involved in finances; financial health and financial wellness. He defined financial health as;
- The individual’s objective financial situation–the state of their finances and ability to meet financial obligations.
- This includes an individual’s income, wealth, savings, retirement preparedness, among other things. It also comprises financial literacy, the skills that are needed to effectively manage financial matters.
Whereas financial wellness was defined as;
- An individual’s subjective sense of security, comfort, and contentment about their financial situation
- How well they feel they are meeting obligations, secure about their future, and able to make financial choices that allow them to enjoy life
And financial wellness is important.
Louis shared that people who are struggling with financial stress can result in creating some significant issues such as;
- Substance abuse, overeating, and an increased risk of adverse health conditions
- It causes about 11.3 lost days of productivity per year
- Between 23 percent and 29 percent of those with high levels of stress from debt live with anxiety or depression
With Canada’s household debt to GDP soaring to 113% and the US levels at 78% coupled with a large number of baby boomers financially ill-prepared for retirement, there are many individuals and families that are struggling with coping and managing their financial situation.
So what can you do if you are financially stressed?
The American Psychological Association suggests taking the following steps;
Make One Financial Decision at a Time.
When people are having to make too many decisions at one time, they said that your willpower can become depleted. They suggest that you space out your decisions so that you don’t feel overwhelmed.
Track Your Spending.
As is often said – knowledge is power. So if you don’t know what your financial situation is, it is very difficult to correct and improve. To do this you will need to track your spending.
There are a number of different ways to do this – hardcopy, excel, an app. Whatever approach you decide to use, the most important thing is that you do it.
Identify your financial stressors and make a plan.
Take stock of your financial situation and where money causes you stress. They shared that even though doing this may cause you some anxiety in the short term, it is necessary in order to proactively deal with your situation. Once you have identified where the problems are you can then put together a plan to address the situation. Once you have a plan that you can follow, your stress levels should begin to decrease.
If you are finding that you are not able to pay your bills or are having to miss payments, they recommend that you reach out to your bank, credit card companies, utilities or other creditors to arrange a payment plan.
Recognize how you deal with stress related to your financial wellness.
How are you dealing and coping with your financial stress? You need to be aware of this as some people are more likely to relieve stress by turning to unhealthy activities (such as smoking, drinking, gambling or emotional eating). Money problems are the top thing that married couples argue about. So chances are this stress also leaks into more conflict and arguments with your partner.
You need to be aware of these behaviors and if they are causing you problems in your life, they suggest that you consider seeking support from a psychologist or mental health clinic.
Even though it may not be possible to stay away from stores altogether, they suggest limiting your time spent there as this will help you better manage your spending. They also recommend that you avoid impulsive spending by leaving credit and debit cards at home and only taking the amount of cash that you can afford to actually spend.
Remember what’s important.
Continue to remind yourself that your family, friends and relationships matter more than material objects.
Ask for support.
If you need help, be sure to ask for support. They recommend that you “surround yourself with people you trust who will support your financial goals and want to help you succeed.”
Taking care of your physical and mental wellness is important but be sure not to forget about your financial wellness too. It ultimately affects the other two.
*This article was originally published on Booming Encore and has been republished with permission