Financial wellness is all about the relationship between a person’s finances and their mental, physical and social wellbeing. It’s important as it stretches far beyond the bank account; being in a good place financially can make you feel calmer, more confident and free to enjoy the pastimes you love.
Like with our physical wellness, maintaining your financial wellness requires consistency, dedication and research. Would you consider searching for a new diet or exercise plan to achieve your desired fitness goals?
Learning about budgeting, investing, saving and much more can boost your financial wellness. Emma Keywood, Senior Marketing and Product Manager at Dodl by AJ Bell has listed five of the biggest reasons why financial wellness is so important.
Enjoying a happy and healthy retirement
Maintaining your financial wellness will help you to achieve long-term goals, which could include enjoying a happy and healthy retirement. The earlier you start investing for later life, the better – even if it’s only a little bit to start. Entering retirement with a healthy investment account, whether than be a pension or an ISA could boost your quality of life and lead to less stress in your later years.
Preparing for a personal finance crisis
In the event of a sudden loss of income, an unexpected medical expense or damage to your car or home, would you be able to sustain your cost of living? Consider setting an emergency fund aside to properly prepare for a personal finance crisis. Having that ‘rainy day fund’ available will reduce feelings of anxiety about possible hardships in the future, and greatly lessen your stress if you do find yourself in a difficult financial situation.
Staying on top of mental health
Worrying about your finances can really impact your mental health but there are plenty of smart financial habits to prevent this. Calculate a realistic budget to stick to, check your bank balance on a regular basis, keep your documents (bank statements, bills, payslips, receipts and so on) in one place and seek advice from professionals (financial or healthcare) if you start to feel overwhelmed. Additionally, if you do find yourself stressed about your expenses, reach out to friends or family; they may not be able to offer financial support, but talking through your situation with others can help you to feel less isolated and anxious.
Reducing debt
Having lots of debts in different places can make it much harder to plan how you’re going to pay all of the money back. For instance, using three different avenues of borrowing like buy now, pay later schemes, credit cards and personal loans means controlling the level of interest for all three will border on impossible. Consider consolidating your debts into one place with the lowest interest rate. This can potentially reduce the amount you have to repay each month and make it easier for you to work out how you can start reducing that debt. The feeling of control may give a significant boost to your financial wellness.
Feeling secure
Above all else, good financial wellness gives you the security to live your life with freedom and spontaneity. You know that you can pay your bills. You know that your finances won’t negatively impact your mental, physical and social wellbeing. You know that you have a healthy financial future. By maintaining your financial wellness, you’re giving yourself the highest quality of life.
