Updated: Nov 8
Financial wellness is a term that’s been thrown around for the past few years. It was developed from the teachings and research of Nobel Prize (2017) winner Richard Thaler, who won the prize for behavioral finance, a subset of behavioral economics.
His work explained: as humans, we are flawed and our psychological influences and biases can mess up our finances.
As the saying goes; Sometimes we can be our own worst enemy.
We’re not however, completely to blame, since ideas regarding money and finances start very early in life; they can be difficult to change.
Most of us had little teaching in school or from our parents about good money habits. Or more accurately, we may have been told that we should “save money’, and “plan for the future”, but not told how exactly to go about doing these things.
But now there’s plenty of information and guidance on the subject to become your own finance ninja. If you can master your behavior and emotions, and conquer external influences, you can control your financial destiny and achieve the four areas (listed below) that contribute to overall financial wellness:
Financial Wellness is:
One: Have control over day-to-day, month-to-month finances
Two: Have the capacity to absorb a financial shock
Three: Are on track to meet your financial goals
Four: Have the financial freedom to make choices that allow you to enjoy life
To get to financial wellness, you’ll have to recognize and change bad behavior, and develop a written plan for what you want your financial future to look like. It’s not enough just to think it, putting it in writing organizes your plan of action, is a way to track your progress and holds you accountable.
Here’s Four Factors that can help or hurt your success
HELP: Future concept: creating a vision for financial wellness
HURT: Impulsiveness: inability to tolerate the “pain” of waiting
HURT: Materialism: possessions and comfort dominate decision-making
HELP: Financial literacy: knowing how to manage personal finances
We incorporate financial wellness as part of our financial planning progress. We’ve had much success with our tools and structured process that we take our clients through. It’s been a game changer to have a measurable process. It’s something to consider if you want a partner and a coach that can help you make real progress. Having a "financial coach" to hold you accountable, may be just what you need.
If you want to take your first step to financial wellness, I suggest you start by tracking your income and expenses and create a budget.
As a thanks for reading my blog, I will send to you as a gift; my Super-Duper Customized Excel Budget Spreadsheet. This spreadsheet will enable you to enter your income and expenses for an entire year. You will need to have Excel on your device in order to use the spreadsheet. Enter your information on our “Contact” form at the footer on our website to have the spreadsheet emailed to you.