A Guide to Financial Wellness: How to Build a Financial Future You Love
🕐 Read Time 4 Minutes
The beginning of every new year is filled with a renewed focus on health and wellness: eating better, exercising more, prioritizing mental health, and practicing self-care. All these small changes are important to your well-being, and with commitment, they can help you build a strong foundation for a healthy lifestyle.
The new year is also a great time to focus on financial health and improve your financial wellness. The benefits of financial wellness go far beyond financial stability alone. Financial wellness is a holistic approach to your financial health and brings with it lasting emotional and mental well-being that comes with effective money management.
Overall financial well-being is on the decline. According to a Federal Reserve report, only 73% of U.S. adults said they were doing “at least okay financially” at the end of 2022, a 5% decrease from the previous year and the lowest it’s been since 2016.
Understanding financial wellness and how to manage it can help you increase your financial health and well-being. By making small, lasting changes and healthy financial choices, you can build a strong, secure financial foundation to support you through the years to come.
Start with the Basics of Financial Health
Financial wellness starts with a focus on the four pillars of financial health:
Spending
Saving
Borrowing
Planning
By understanding these key components, you can develop lasting strategies to improve your financial wellness.
Spend: Budgeting and Money Management
Creating a budget is the cornerstone of financial wellness, as it can give you insight into your spending patterns — how much comes in, how much goes out, and how you can make shifts in your spending so you can spend less and save more.
A budget, or spending plan, is like a roadmap to reaching your financial objectives. Sticking to a budget encourages financial discipline and responsible money management, which are key to achieving your financial goals.
Save: Building Savings and Investing
Cultivating a habit of saving also fosters financial discipline and can improve your financial wellness. Having savings gives you the peace of mind that you’ll be able to meet your financial needs.
Building savings includes creating and maintaining an emergency fund, which is a financial safety net to protect you from unforeseen expenses. By setting aside some of your savings for emergencies, you can add to your financial resiliency and be better prepared for the unexpected.
Investing your money provides the means to grow your wealth and meet your long-term financial goals, including higher education for your children or funding your retirement years. Investing wisely can contribute to your financial security, make you feel more confident about the future, and support your overall financial wellness.
Borrow: Managing Debt
A crucial part of financial wellness and smart money management is borrowing money responsibly and managing your debt. Educate yourself on your options to pay off debt, and explore strategies that will help you reduce or eliminate your debt. When you decide to borrow money, be mindful if it’s for an essential or non-essential expense so that you don’t take on unnecessary debt.
There’s a sense of accomplishment that comes with successfully managing your debt and having the financial freedom to save more, invest more, and accumulate more wealth.
Plan: Setting Goals
It’s important to set goals in your journey toward financial wellness. Defining your short-term and long-term goals can give you motivation and direction, guiding you toward financial success and well-being. Whether it’s paying off debt, boosting your savings, enhancing your investment portfolio, or a combination, a financial plan can help you stay on track to reach your goals.
Develop a financial plan by looking at the full picture: what your goals are, how much time you have to accomplish them, and how much risk you’re comfortable with. With this knowledge, you can create a strategy on how to reach each of your goals now and in the future.
The Importance of Financial Literacy
Financial literacy isn’t just about understanding complex financial concepts; it’s about gaining practical knowledge you can use to make everyday financial decisions and manage your money wisely. Being financially literate empowers you to make informed choices that benefit your financial well-being. You can read personal finance books, listen to podcasts, take online courses or webinars, or attend workshops to improve and enhance your financial literacy.
Partnering with a financial professional like the coaches at Financial Fitness Coaching can also help you broaden your financial literacy and promote smarter money management. A financial professional can provide you with tailored advice based on your unique financial circumstances and needs, and help guide you in your journey to financial wellness.
Ways to Boost Your Financial Health
Start by intentionally practicing a positive money mindset. Reframe your perspective on financial challenges and view them as growth opportunities rather than insurmountable obstacles. A positive money mindset will help you build financial resilience and make proactive decisions, setting you up for long-term success.
It’s also helpful to identify and change any ‘bad’ financial habits you may be holding onto. Whether it’s impulsive spending, accumulating debt, or procrastinating your financial planning, if you can commit to breaking negative habits, you can instead develop more positive financial behaviors that result in better financial health.
Finally, money is one of the biggest stressors in life, so it’s important to recognize and manage any financial stress that’s having a negative impact on your well-being. Positive coping mechanisms such as journaling, talking with a trusted loved one, or even hiring a financial coach are a few good ways to manage financial stress as you build more positive money habits.
Take the Journey to Financial Wellness
Financial wellness is not a destination, but an ongoing journey. As you work toward financial wellness, taking small, intentional steps paves the way for a radically more fulfilling financial future. It’s not a journey you have to take alone: Our priority this year is to guide, support, and recognize your accomplishments as you work toward financial wellness.
Are you ready to get started?
Join our free 2024 Financial Wellness Challenge: 30 Days to Better Money Habits 🎉
For the next 30 days, you’ll receive a daily email with an actionable task and advice to encourage you to build positive money habits, promote financial wellness, and move you closer to your financial goals — one intentional step at a time.
Sign up now for 30 Days to Better Money Habits and renew your focus on financial wellness this year. We’re here to help you, every step of the way.