Financial wellness continues to be a popular topic with many people coming up with ingenious ways of measuring how financially well you are.
But, in my opinion, financial wellness can’t be measured simply by a rating or your bank balance, or even the value of your investment portfolio. Being “financially well” is a state of being, and this changes constantly as one goes through their various life events, both expected and unexpected.
To be clear, being financially well does not directly lead or equate to one being happier. Instead, it has a direct impact on very important life factors that make you happier and is a different experience for everyone – and yes, being financially well is an experience; a very personal experience.
Financial wellness is not solely based on your level of financial literacy, it is influenced by a number of factors such as gender, marital status, income, etc. However, financial literacy does improve your well-being by being able to understand and manage your financial concerns and make the best possible decisions when it comes to financial matters.
For instance, consider stress. There are many factors that lead to stress, whether it’s due to the pressures of your job or business, issues with family and friends, and of course, your finances – paying bills, saving for the future, ability to pay for an unforeseen expense, etc.
By being financially literate, the level of stress in being able to understand and manage day-to-day concerns becomes easier.
Not to say that any financial pressures will go away, but it is easier to manage something that is understood rather than managing an unknown. Getting a handle on your finances helps you reduce your debt, improve your credit and begin saving for emergencies and the future.
A family’s finances’ is a leading cause of friction in relationships – normally because one person is making all the decisions while the other is not getting involved because they feel they don’t know enough to help out. Having a spouse or partner on the same page as you and both choosing to be financially literate will strengthen your relationship – money will no longer be a topic of contention.
Lastly, financial literacy will free up a lot of your time so you can do things that are most important in your life – spending more time with your family, hobbies, traveling or volunteering. The time you spend looking at your accounts, seeing how you can make the next payment on your credit card or sitting there thinking about the level of stress you’re in due to these financial concerns – all this time can now be spent doing something else! It will also help you be more productive at work as well – how much time do you take away at work thinking about these things?
Financial literacy is a process – it will first help guide you on gaining greater control of your finances. It will then give you the capacity to understand and absorb a financial shock and put you on the right track to meet your financial goals. If all of the previous items are on track, it will lead you to a level of financial freedom to make choices that all you to enjoy your life!