What Is Financial Wellness?
Financial wellness is a state where you’re able to fully meet your money-related needs right now and later on in life. If you’re financially well, you’ll feel secure about your financial future. You won’t be overly stressed about money and will be able to enjoy life comfortably.
To be financially well, it’s important that you have financial literacy. This is the knowledge and training that help you control your finances. Financial literacy includes the ability to invest money for retirement, create and use a household budget, or speak with an expert about large purchases.
Other things that affect your financial wellness include:
- Your current financial situation needs
- Regular financial behaviors
- Activities that can help you manage your money
- Confidence about money
- Short-term and long-term planning
You may feel that your financial wellness is strong. You may have a plan in action and understand how to stick to it. But it’s also realistic that you may be in a tough financial situation. There are many reasons why this could be the case. Expenses add up and, over time, can lead to poor financial wellness. You may feel worried about your financial wellness due to:
- Medical debt or upcoming medical expenses
- Student debt
- Credit card debt
- Future family expenses
But any source of financial discomfort can lead to poor financial wellness.
It's important to know that debt and financial trouble can lead to poor effects on your health. The more debt you have, the more it can affect your well-being. This is especially true as you get older.
How Does Financial Wellness Affect Your Mental Health?
The link between your mental health and financial wellness is large. Experts have found that stress from money problems tends to be chronic, or long-lasting. They also found that financial issues are the top source of stress for most people – even more stressful than politics, family, and work.
Low financialwellness and literacy can lead to high financial stress. Just like with other stressful things in life, this type of tension can cause you to become anxious, depressed, and overwhelmed.
Many people with previous mental health disorders also say that financial troubles make their mental health worse. Similarly, a study found that a large majority of people learned that worsened mental health made their financial wellness worse, in turn.
Mental health and financial wellness work together in a cycle. If one isn’t well, it usually affects the other. Stigmas around debt or poor financial wellness can cause people to not want to ask for help.
If you get to a point where you need to cut back on essentials, like food or heating, mental health impacts can become severe. This makes it even more difficult to recover from mental health disorders. Experts found that people in severe financial troubles are three times more likely to think about suicide. Without proper access to mental health care, it’s difficult to seek help.
How Does Financial Wellness Affect Your Physical Health?
If you have high levels of financial stress, you’re more likely to notice it affect your physical health. This type of pressure can lead to issues like:
If your financial wellness is low and you have high financial stress, you’re twice as likely to have poor overall health. Experts also found that you’re four times as likely to get some sort of condition.
Often, these new health issues lead people to spend even more money on medical needs. If you’re already in a tight financial situation, this will just add to the stress.
Financial stress can also lead to unhealthy coping mechanisms. You might be more likely to overeat, use alcohol or drugs, and smoke if you’re stressed about money. But these things only worsen both situations. They lead to further health issues and often can create even more financial stressors.
How Can You Improve Your Financial Wellness?
Your mental and physical health can improve from stronger financial wellness. It’s important that you take the steps to improve your financial situation:
Look for spending patterns. Review your spending and saving habits. Compare this to your current financial situation and decide if it fits your means. Look for a pattern in how much and when you spend money. Decide what expenses you can continue and what you can cut out.
Ask others for help. There are a ton of resources that can help you become financially well. Take lessons from books, classes, or a trusted mentor to learn more ways to manage your finances.
Create a budget. Write down all of your expenses and make a budget based on what you actually require. Track your spending so that you stick to this.