Why financial wellbeing is a pillar of good health
Financial wellbeing is more than just earning an income, financial wellbeing is about having financial security and the freedom to make choices. Your financial wellbeing can directly affect your mental health. 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.
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.
- Building an emergency fund of at least six months living expenses.
- Making regular savings.
- Reading and continuously improving your financial literacy.
- Having regular discussions with your partner about your finances to ensure you are on the same page.
- 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.
How can a financial advisor help?
When you go to see a financial advisor, they’ll look at your overall financial situation and develop a plan tailored to your circumstances. The plan will include detailed strategy for investment, paying down debt, insurance and more.
It is an ongoing relationship, so look for someone that you feel comfortable with and can work with long-term.
A financial advisor is able to support your changing needs at every stage of life. For example, in your twenties and thirties a financial planner can help you save, invest and plan for a family. They can help you consolidate and protect your wealth into your forties and prepare for retirement in your 50s, 60s and 70s.
Source: Money and Life