Wellness is a concept that many people discover and attempt to practice to lead a better life. Wellness is mainly about adopting healthy habits, such as eating nutrient-rich foods and working out, that can help you achieve a holistic lifestyle.
Such activities can also bring you closer to a better financial life under the financial wellness concept. Financial wellness focuses on changing your financial attitude and developing beneficial money habits to keep your finances on stable grounds and attain financial freedom.
Financial Wellness Explained
Financial wellness refers to an individual’s ability to manage their financial life properly. Working to better your financial wellness will involve three things, all aimed at improving the overall quality of your life. And those are having healthier money habits, goals, and a good strategy to achieve them.
Practicing financial wellness can affect many of your daily activities as well as long-term plans such as retirement. From effective budgeting methods and saving for your future self to real estate and retirement planning, financial wellness is connected to your familiarity with your needs and planning.
Such types of primary goals are a must in creating a well-thought-out financial strategy.
Elements of Financial Wellness
While financial wellness can be perceived in many ways, we’ll use four categories or elements to understand it: short-term and long-term finances and present and future financial freedom.
- Short-term finances
Managing your short-term finances usually involves budgeting, following that budget, and trying to steadily boost your income.
You and many others should make a budget, properly learn about their household income statement, and try living within their means.
Talking to a financial expert can guide you through managing your short-term finances and ensure you’re making the right calls.
- Long-term finances
Getting your short-term finances in shape will help you have the opportunity to save and invest for long-term goals, like buying a house and building your retirement fund.
To gain control over your long-term finances, you can consult with a reliable financial advisor or have your family assist you. You should also include going through your assets and liabilities in the process of handling your long-term finances.
- Present financial freedom
Managing short-term finances can lead you to present financial freedom, which is possible when you’re financially literate. Still, the wellness aspect is achieved when you feel like you’re the boss of your finances.
It’s about looking at the figures next to your financial habits and making necessary changes to ensure that your goals and understanding of financial well-being are represented in the items you spend on.
- Future Financial Freedom
Working to achieve your future financial freedom involves carrying out plans to meet your long-term financial goals. Planning for your retirement is crucial to your future financial freedom.
There are tried and proven ways to earn and attain financial wellness. Simply put, the road to financial wellness is built on routine, multi-year commitments.
Understanding Financial Wellness and Financial Literacy
Financial wellness and financial literacy share a close relationship but are two completely different concepts.
Financial wellness focuses on doing the necessary to better your financial life, while financial literacy is a matter of grasping the concepts and means you can use to control your money. It is more about taking in the basic details of different types of investments and how they work.
Financial literacy covers understanding skills such as investing, saving, budgeting, and tax management. You can gain such skills by learning and researching concepts of personal finance.
Grasping the ropes of financial literacy is vital to financial wellness, but the difference is that financial wellness also encompasses the more significant part of your emotions.
Financial wellness is a more comprehensive way than just being financially literate. It covers more than what you know financially, involving all your feelings about money-related matters.
Practicing Financial Wellness
To practice financial wellness, you will need to master the ways of budget making, adequate saving, proper investing, and debt and insurance usage. That means making those skills part of your daily life so you can achieve your current and future goals.
Additional earnings can only improve your quality of life for a limited period. Therefore, you should check yourself from time to time on whether you’re living your values in your finances.
Applying financial literacy skills is more than just following the rules. Instead, you’re trying to know how you would like to exercise those values to make the life you dream of having a reality.
For instance, budgeting is a financial skill, but budgeting to gain control over your present and future finances is progressing toward financial wellness.
Likewise, every financially literate individual should know how to use debt. However, you’re taking a step towards financial wellness when using debt like mortgages and car loans to meet your goals.
In saving and investing, financial literacy is knowing how to do them. On the other hand, financial wellness is when you’re saving and investing for your emotional well-being.
Achieving Better Financial Wellness
You can better your financial wellness in many ways, but it all starts with working on your financial literacy. That way, you can learn how to better apply the principles of financial literacy to meet your goals.
Many tend to look at the details of their situations at the expense of the big picture. But those who have achieved financial wellness, particularly those who feel optimistic about their retirement, usually have taken the necessary steps to prepare for their future.
Taking those into consideration, here are the points you need to work on to reach your financial wellness:
- Making a budget.
- Building an emergency fund.
- Cutting or eliminating debt.
- Saving and investing.
- Protecting your assets.
- Planning for long-term goals and retirement.
There are several routes you can take to improve your financial wellness. You can seek advice from a financial advisor, read books and articles, or get additional support from the outside.
Regardless of the path you choose to achieve financial wellness, you will need to look at the present with a view toward your future.