How to improve your financial wellbeing and achieve your goals

Financial wellbeing is not just about how much money you have, but how you manage it, how you feel about it, and how it aligns with your values and goals.

This is why it’s one of the 8 Dimensions of Wellness that affect your overall wellbeing and happiness.

Financial wellbeing can have a significant impact on your psychological wellbeing, as it can influence your stress levels, your self-esteem, your sense of security, and your ability to pursue your passions and dreams.

So, we wanted to explore some tips and strategies to help you improve your financial wellbeing and achieve your goals, whether they are short-term or long-term, personal or professional.

What is Financial Wellbeing?

Financial wellbeing is “a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life”.

Financial wellbeing is not a fixed state, but a dynamic and subjective one that can change over time and vary from person to person.

It depends on factors such as your income, expenses, assets, debts, savings, investments, financial literacy, financial behaviour, financial goals, and financial attitudes.

To measure your financial wellbeing, you can take the CFPB’s quiz, which will give you a score between 0 and 100 based on 10 questions.

The higher the score, the higher your financial wellbeing.

Why is Financial Wellbeing Important?

Financial wellbeing is important because it affects not only your material well-being, but also your emotional, mental, physical, and social well-being.

Some of the benefits of having a high level of financial wellbeing are:

• You can meet your basic needs and wants without difficulty or anxiety.
• You can handle unexpected expenses or emergencies without going into debt or compromising your quality of life.
• You can save and invest for your future goals, such as retirement, education, travel, or buying a home.
• You can enjoy the present moment and pursue your hobbies and interests without guilt or worry.
• You can support causes and organizations that matter to you and make a positive difference in the world.
• You can have healthy and harmonious relationships with others without financial conflicts or stress.

On the other hand, having a low level of financial wellbeing can have negative consequences for your overall well-being, such as:

• You may struggle to pay your bills or debts on time or at all.
• You may experience chronic stress, anxiety, depression, or low self-esteem due to financial worries or insecurity.
• You may compromise your physical health by skipping medical appointments or treatments, eating poorly, or neglecting exercise.
• You may isolate yourself from others or avoid social activities due to financial constraints or shame.
• You may miss out on opportunities or experiences that could enrich your life or advance your career due to lack of funds or confidence.
• You may feel trapped or hopeless in your current situation and unable to change it for the better.

How to Improve Your Financial Wellbeing

Improving your financial wellbeing is not a one-time event, but a continuous process that requires awareness, intention, action, and adaptation.

Here are some tips and strategies to help you improve your financial wellbeing and achieve your goals:

1. Assess Your Current Financial Situation

The first step to improving your financial wellbeing is to get a clear picture of where you are right now.

This means tracking your income and expenses, calculating your net worth (assets minus liabilities), reviewing your credit report and score, and evaluating your financial behavior and habits.

You can use tools such as budgeting apps, spreadsheets, or online calculators to help you organise and analyse your financial data. You can also use our spending tracker to get a sense of your regular expenses.

The purpose of this step is not to judge yourself or feel bad about your situation, but to understand it objectively and identify areas of improvement.

2. Set SMART Financial Goals

The second step to improving your financial wellbeing is to set SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) goals that reflect what you want to accomplish with your money.

Some examples of SMART financial goals are:

• Save $10,000 for an emergency fund by December 31st
• Pay off $5,000 of credit card debt by June 30th
• Increase my income by 10% by March 31st
• Invest $500 per month in a retirement account starting January 1st
• Donate $100 per month to a charity of my choice starting February 1st

To set SMART financial goals, you need to consider your values, priorities, needs, and wants, as well as your current financial situation and future expectations. You also need to make sure your goals are realistic, attainable, and aligned with your overall wellbeing.

You can use tools such as goal-setting worksheets, planners, or apps to help you define and track your financial goals.

You can also use our Story of My Life Journal or Weekly Wellbeing Planner to help you set and achieve your goals in a holistic and meaningful way.

3. Create and Follow a Budget

The third step to improving your financial wellbeing is to create and follow a budget that matches your income and expenses, as well as your financial goals.

A budget is a plan that shows how much money you have coming in and going out each month, and how you allocate it among different categories, such as housing, food, transportation, entertainment, savings, investments, debt payments, etc.

A budget can help you:

• Control your spending and avoid overspending or impulse buying
• Save more money and build your emergency fund or other savings goals
• Pay off your debts faster and reduce your interest costs
• Invest more money and grow your wealth over time
• Track your progress and adjust your plan as needed

You can use tools such as budgeting apps, spreadsheets, or online calculators to help you create and follow a budget.

4. Build an Emergency Fund

The fourth step to improving your financial wellbeing is to build an emergency fund that can cover at least three to six months of your essential living expenses in case of an unexpected event, such as a job loss, a medical emergency, a car repair, or a natural disaster.

An emergency fund can help you:

• Avoid going into debt or using high-interest credit cards or payday loans
• Protect your credit score and avoid late fees or penalties
• Maintain your standard of living and avoid cutting back on necessities
• Reduce your stress and anxiety and increase your peace of mind

You can build an emergency fund by:

• Setting a specific amount and timeline for your emergency fund goal
• Saving a portion of your income every month or every paycheque
• Automating your savings by setting up a direct deposit or a recurring transfer
• Keeping your emergency fund in a separate and accessible account, such as a high-yield savings account or a money market account
• Using your emergency fund only for true emergencies and replenishing it as soon as possible

5. Pay Off Your High-Interest Debts

Improving your financial wellbeing can also involve paying off your high-interest debts, such as credit cards, payday loans, personal loans, or car loans.

High-interest debts can hurt your financial wellbeing by:

• Eating up a large portion of your income and reducing your cash flow
• Increasing your total debt amount due to compound interest
• Lowering your credit score and affecting your ability to borrow money in the future
• Causing you stress and anxiety and affecting your mental health

You can pay off your high-interest debts by:

• Making more than the minimum payments every month
• Using the debt snowball method (paying off the smallest debt first) or the debt avalanche method (paying off the highest interest rate debt first)
• Consolidating your debts into one lower interest rate loan or balance transfer card
• Negotiating with your creditors for lower interest rates or payment plans
• Seeking professional help from a nonprofit credit counselling agency

6. Improve Your Financial Literacy

The final tip we’re offering to improving your financial wellbeing is to boost your financial literacy by learning more about issues such as money management, investing, taxes, and retirement planning.

Financial literacy is the knowledge and skills that enable you to make informed and effective decisions with your money.

Improving your financial literacy can help you:

• Understand how money works and how to use it wisely
• Avoid common financial mistakes and pitfalls that can cost you money
• Avoid financial scams and frauds that can harm your finances and identity
• Take advantage of financial opportunities and incentives that can benefit you
• Plan ahead for your financial future and retirement

You can improve your financial literacy by:

• Reading books, blogs, podcasts, or magazines about personal finance and investing
• Taking online courses, webinars, or workshops on financial topics that interest you
• Following reputable financial experts, influencers, or mentors on social media or YouTube
• Joining online or offline communities, groups, or clubs that share your financial goals or challenges
• Consulting a certified financial planner, advisor, or coach for professional guidance

Financial wellbeing is an important aspect of your overall wellbeing that affects your happiness and quality of life, and considering your circumstances can help you achieve your goals in a holistic and meaningful way.

If you need more support or guidance, feel free to contact us!

We are here to help you create the best version of yourself.