Four steps to achieve financial wellness
By ATB Financial 18 April 2019 3 min read
Introduction to Financial Wellness
We all know it’s important to take care of ourselves so that we can live long, productive and rewarding lives. When we put our wellness first, it not only improves our health, but it helps us have better relationships with our family and friends, feel more confident and be happy.
While you may take your daily multi-vitamins, exercise daily, practice mindfulness and get a good night’s rest, how would you rate your financial wellness?
Did you know your physical and mental health are connected to your financial wellness? Understanding what it is and how these concepts are related is an important step in achieving overall well-being.
What is Financial Wellness?
First, it’s important to understand what financial wellness means. It’s different than financial literacy, which is how well you understand various financial concepts. Financial wellness is a more holistic view of your attitude towards your finances, and your sense of freedom when it comes to your money and your goals.
There are four essential steps that define financial wellness, and they serve as building blocks – you can’t move to the second one without the first.
Four Steps of Financial Wellness
1) Do you have control over your day-to-day and month-to-month finances?
Think of it this way – Do you have a good understanding of where your money comes and goes each month, and where you’re spending it? Do you know how much money you have left at the end of the month, or do you consistently overspend?
2) Do you have the capacity to absorb a financial shock?
Let’s say you had to come up with $500 right away for an unanticipated expense – it could be to treat a pet’s illness, repairing your vehicle or fixing your furnace. Would that money be readily available for you without making a big impact?
3) Are you on track to meet your financial goals?
There are short-term and long-term financial goals. A short-term goal would be something like taking a holiday, planning a home renovation or purchasing new furniture. A long-term goal would be saving for your retirement or contributing to your children’s RESPs. Happiness comes from having and achieving both short-term and long-term goals, so that you’re planning for the life you want, while enjoying the life you want to have right now.
4) Do you have the financial freedom to do the things that you enjoy?
What are your dreams and aspirations? Can you travel to the places you’d like to go? Do you have a target age that you’d like to retire at, and do you feel confident you’ll be ready? Having the opportunity to make these choices is what gives you a sense of freedom.
Am I The Only One Who Worries?
How did you rate? If you feel like you could you make some improvements, you’re not alone. Financial worry isn’t limited to those who earn less. A report by Mercer indicates that money stress cuts across all income levels. Many people in households making more than $100,000 a year were just as stressed about how to pay their bills and save for retirement as those earning far less.
Think that money woes mainly affect the young? The same report showed that most employees over 50 years of age don’t have a strategy for saving for retirement. Also, women on average tend to have significantly lower levels of financial wellness than men, due to circumstances such as pay differentials, going on leave to raise children or care for elders, and women on average live 4.5 years longer than men.
Further, the lower that people scored in financial wellness, the more likely they are to be in poor physical health and suffer from the typical symptoms of stress.
Finding Your Wellness
GICs, TFSAs, savings, spending, bills, budgets, debt—it can all feel overwhelming! But just as you work hard to take care of your overall health and wellness, working on achieving financial wellness is no exception.
ATB is here to help you get started on your path toward financial wellness, making sure you can enjoy life today, while preparing for the unexpected and planning the retirement of your dreams.
ATB Wealth consists of a range of financial services provided by ATB Financial and certain of its subsidiaries. ATB Investment Management Inc., ATB Securities Inc., and ATB Insurance Advisors Inc. are individually licensed users of the registered trade name ATB Wealth. ATB Securities Inc. is a member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.