You can pretty quickly define wellness in terms of your health. You’re able to participate in the activities you want, and your body doesn’t hold you back from moving toward your personal goals. But how about financial wellness? Have you taken the time to consider what that means to you and whether you’re on track to reach your financial goals?
What Is Financial Wellness?
According to the National Financial Educators Council, financial wellness refers to how financially secure you are. It involves asking yourself these questions:
- Are you financially prepared for emergencies?
- Do you have plans for reaching your short-term and long-term financial goals? This includes planning for retirement.
- Do you have a budget? Do you stick to it?
- What’s your attitude toward money?
According to the Financial Health Network, financial wellness comprises four elements: spending, saving, borrowing, and planning. In a 2018 survey, the network found that 28% of Americans were financially healthy, 55% were financially coping, and 17% were financially vulnerable.
By the way, financial wellness shouldn’t be confused with financial literacy. Financial literacy—your ability to grasp financial matters—is just one component of financial wellness.
“Being ‘well’ financially includes the total picture of your financial health, including how your financial situation affects your stress levels and overall mental and physical health,” financial services provider Prudential explains. “Financial wellness is not a destination; it’s a constant journey of making adjustments and building resilience to maintain financial equilibrium, not only to pay your bills but also to enjoy a more stable, healthy and successful life.”
The University of San Diego points out that financial wellness is one of seven pillars of overall wellness. The others are:
- Emotional wellness
- Environmental wellness
- Intellectual wellness
- Physical wellness
- Social wellness
- Spiritual wellness
Financial services provider Vanguard notes that financial wellness doesn’t mean your financial concerns will evaporate, though. Instead, the company writes, financial wellness “means having a strong enough foundation and a clear financial strategy to make setbacks more tolerable, and financial adversity and healthy risk-taking less daunting.”
It’s important to keep in mind that in the absence of financial wellness, it’s next to impossible to build generational wealth that you can pass along to your heirs.
What Does Financial Wellness Mean for You?
Everyone’s financial situation is different. Therefore, financial wellness can take on a slightly different meaning for each of us. However, Prudential outlines three overarching principles of financial wellness that can apply to anyone:
- Managing day-to-day finances. This includes managing your household budget, keeping on top of your credit score and other aspects of your credit, and setting up a fund to cover emergency expenses.
- Setting and achieving financial goals. A key to this is making sure you’re on track for a financially comfortable retirement. How much money will you need for retirement? Are you saving money in an employer-sponsored retirement account? Do you have an IRA or another vehicle for growing your monetary assets? Is your portfolio adequately diversified, taking into account asset alternatives, like precious metals?
- Shielding yourself from risk. Life can throw financial setbacks in your path. To protect yourself in the event of a setback, like a serious illness, you should ensure your finances are in order. Do you have health insurance or life insurance? What about disability insurance? Are you setting aside money for retirement? These and other financial safeguards can help you overcome a financial setback.
The U.S. Money Reserve website is full of resources to help you fine-tune your financial future. We also have Account Executives available by phone to help you learn more about precious metals, in particular. Call today for a free one-on-one consultation.