What is financial wellbeing?
An introduction to financial wellbeing and where to get support.
Financial wellbeing is about so much more than keeping to a budget or building a retirement plan. It also involves the way we deal with thoughts and emotions about money.
In episode 3 of Science Corner, behavioural scientist and Groov Clinical Lead Dr Fiona Crichton outlines four key factors of financial wellbeing:
Being in control over your day-to-day finances
Your ability to absorb a financial shock
Being on track to meet your financial goals
Having the freedom to make choices that allow you to enjoy life
Watch Science Corner for Dr Fiona’s full presentation, or read more about the four key factors of financial wellbeing below.
1. Control over your day-to-day finances
Being in control of your day-to-day finances can reduce anxiety and stress. Control involves practical habits – like tracking your money – as well as psychological habits, such as noticing how you feel about money and how you act in relation to your finances.
Tracking your money can reduce anxiety as it allows you to know what your financial situation is and what you’re spending money on. Worry can be exacerbated by not knowing. When you know, you can set realistic goals and plan from a position of knowledge.
Noticing how you feel about your finances can help you unpack some of your money stories and attitudes. A lot of attitudes about money come from our past experiences, particularly in childhood. Once we understand some of our attitudes, it can be easier to make changes and start to view money differently. If you find this hard, please know this is normal – it’s common for people to feel uncomfortable thinking about money because of past experiences. If that’s you, go easy on yourself and practice self-kindness.
2. Your ability to absorb a financial shock
Being able to absorb a financial shock – such as a job loss or unexpected expense – means being able to still meet your basic needs. For example, pay rent or a mortgage and pay for food.
Saving enough money for potential emergencies can be really difficult, especially during a cost of living crisis. Remember, most of us are not financial experts, so seeking professional advice that’s tailored to your situation is a really good idea. Having an expert to guide you can help to take the pressure off and ensure you are in a better position to weather unexpected costs.
3. Being on track to meet your financial goals
One psychological habit that can help you meet your financial goals is being really clear on your values. What matters most to you? And how can you match your current financial situation and choices about money with these values?
It’s much easier to be motivated about taking control of your money when decisions you’re making are furthering things that matter to you.
4. Having the freedom to make choices that allow you to enjoy life
The fourth factor of financial wellbeing is feeling able to make choices that allow you to enjoy life, such as spending more time with friends and family.
This factor is closely related to the first three. When you feel in control of your day-to-day finances, able to absorb a financial shock, and are on track to meet your financial goals, you’re in a really good place to enjoy better financial wellbeing.
Where to go for financial advice and support
Just like mental wellbeing, financial wellbeing is fluid and exists on a spectrum. Some life events will push you further towards flourishing, while others may push you further towards languishing.
If you are struggling with your financial wellbeing right now, please ask for help. Money stress is normal and common – you are not alone. Below are some places you can go for support.
Your bank or credit union. Enquire to understand what tools, assistance, and budgeting resources are available.
Online brokers. Many online brokerages have a range of free tools and resources on their website.
Consumer Financial Protection Bureau (CFPB). Find answers to your money questions from this U.S. government agency dedicated to making sure you’re treated fairly by banks, lenders, and other financial institutions.