Money and Life
(Financial Planning Association of Australia)
Much like exercise and eating well, your financial wellbeing is key to living a happy and healthy life. So what is financial wellbeing and how can you improve yours?
Financial wellbeing is often overlooked as one of the pillars of good health, but it’s every bit as important as your physical, mental and emotional health.
Poor financial health has been linked to a range of nasty side effects like stress, depression, anxiety, sleeplessness, relationship break-down, drug and alcohol use to name a few. Yikes!
Good health is often about balance. Getting on top of your financial wellbeing can certainly relieve stress and give you the time and money you need to balance all aspects of your health.
What is financial wellbeing?
When we talk about financial wellbeing, what do we mean?
More than just earning an income, financial wellbeing is about having financial security and the freedom to make choices.
There are three interrelated aspects to good financial wellbeing:
- The ability to meet your expenses and have money left over.
- Feeling and acting in control of your finances.
- Being financially secure and not needing to worry too much about money.
It’s considered normal for your financial wellbeing to vary over the course of your life. This is particularly true during major life events such as moving out of home, having a baby, changing jobs or retiring. Unexpected financial shocks can also have a big impact on your financial wellbeing.
How fit are our nation’s finances?
The Financial Wellbeing Australia report (2018) describes four categories of financial wellbeing. Around a quarter of all respondents (extrapolated to 4.5 million Aussies) were classed as having the highest level of financial wellbeing. That is, “no real financial worries… high levels of confidence in managing money and substantial amounts of savings, investments and superannuation.”
Around 40% (or 7.4 million Aussies) fell into the category of “doing ok”. They described their situation as “fair” or “good” and were relatively confident about the next 12-months. A further 23% of respondents (around 4.4 million people) were just getting by, while the remaining 13% (2.4 million people) were considered to be “struggling”.
How can I improve my finances?
Developing good financial habits will help you improve your financial health over time. That includes:
- Having a budget or spending plan.
- Making regular cash savings.
- Building an emergency fund of at least six months living expenses.
- Paying down debt and maintaining a good credit rating.
- Having adequate insurance.
- Building up enough superannuation to retire comfortably.
Much like your physical and mental health, your financial health needs regular check-ups to stay in good condition.
It’s really easy to conduct your own , or you can find a financial planning professional to help you.