Financial Wellness

Part six of the Mental Wellness series

How healthy are your finances? Do you even have a plan? Do you just wing it, hoping nothing too big goes spectacularly wrong? Are your fingers crossed every time you swipe your card? How would you even know if you had everything under control? What is financial wellness?

Tim Roth and Jim Harter from the well-known organisation Gallup identify financial wellness as “effectively managing your economic life”. To effectively manage your financial life you need to consider a large number of factors, but it really all boils down to four key areas. First, having a plan for the future is important. Second you need to be living within your means. Third is being prepared for emergencies, and finally being able to make good financial decisions through the use of appropriate information and advice. These four key areas all work together to create financial security, which is really financial wellness.

Often the first step is a good audit of where you are right now financially. Take stock of your debts, all of them. Write them all out. Add it up, take a good hard look at that. Does it hurt a little to see it all in front of you like that. Next, take a look at your known expenses every week, fortnight or month. Usually the best way to tackle this is on the same time frame that you are paid on, e.g. if you are paid fortnightly, work out your expenses fortnightly. Include repayments of those debts we just wrote down. Then, write down your income, all of it, interest, salary, share dividends, whatever.

If you are struggling with how to manage this, a book that has helped many people is The Barefoot Investor by Scott Pape. The simplicity of his work often makes it easier for people who really struggle with sticking to a very specific budget. Pape recommends using “buckets” of money using percentages rather than writing specific numbers such as $150 per week for groceries. One great thing I found with Pape’s book was the process of really investigating the products that we take for granted such as our superannuation and banking.

Consider how you feel about your financial situation. Do you think you would benefit from talking to a financial counsellor? Many free services are offered for people who may be struggling with their debt levels. The Australian Government provides information about managing debts and how to get help which is available by clicking on this link

It can be incredibly difficult to undertake a review and make changes to our financial situation. We live in a “have it now” world where pay day loans, interest free, Afterpay, zip pay, everything is geared to have it now and pay for it later. The question remains, where does this really leave us? If having all that means we miss out on things in the future, is there a benefit to having it all now. Do we even have time to use it all? Consider how your financial wellness can be supported by engaging in the other areas and enjoying things differently. Next week we’ll consider occupational wellness, as this is an area that can considerably impact our financial wellness.

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