When we speak about financial wellness we’re talking about your relationship with money. It refers to how secure your money is, given all the variables involving an unknown future.
Are you financially prepared for emergencies? Do you have active plans in place to reach your long-term and short-term financial goals throughout life? It also includes your present situation with money. Do you have a budget and a plan? Do you stick to it? What about your attitude toward money?
Does the thought of it make you sick to your stomach or does it make you come alive? All these considerations and more must be a part of a thorough financial wellness definition.
WHY IS FINANCIAL WELLNESS IMPORTANT?
Financial wellness is critical because it can help lower your stress levels. Stress related to money can affect every aspect of your life. Your personal and professional productivity could potentially suffer due to financial worry. In fact, this is one of the key reasons that so many employers offer financial wellness programs. Employers are aware of how stress reduces productivity and recognize that helping their employees learn about financial wellness can help strengthen the business’ bottom line.
Financial wellness is very much like physical wellness in that one is never really completes the process. My observation is that once you pass through one life phase you are on to another with its own, yet similar concerns. For example, a young couple will save enough to put
a down payment on a home.
Once that is accomplished, they move right on to paying for that home and managing the risk should something happen to them. Then they provide schooling and college for their children. Then they plan for a comfortable retirement without worry about money. With each goal, there should be a learning process that occurs each time a goal is accomplished.
We know that getting into great physical shape takes time and attention. Getting into great financial shape takes significant time as it will most often require many years to undo bad habits and establish new, healthier ones. Specifically, like gaining muscle mass, improving your credit score and your savings account will require years and significant attention to detail.
We also know that habits are important to goal achievement. If I get in the habit of doing something frequently, it becomes part of my nature and I can easily repeat it.
Those people who are in the habit of working out every day can tell you that they don’t talk themselves out of it. Strangely, they begin to look forward to it as it has
a predictable routine. It is quite similar with excellent financial habits. As you follow a monthly budget and paying bills timely become a habit, you become a more financially disciplined person.
Will Durant wrote: “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” A healthy financial habit is not only excellent, but profitable to one’s life.
Financial wellness can help you in the long run. If you’re focused on financial wellness, you’re also working on your long-term goals, and as a result, you are likely to enjoy both your present and your future more.
LaDonna Sinning, CPA, CFE, is a partner at Arledge and Associates, PC, an Edmond-based accounting firm. Arledge and Associates, PC is a recognized leader in the accounting industry offering practical solutions in the areas of tax planning, auditing, consulting, accounting advisory services and client accounting. Through its Gateway Executive Solutions division, the firm offers outsourced CFO, controller and cloud-based accounting solutions.
This article contains general information only and does not constitute tax advice or any other professional services. Before making any decisions or taking any action that might affect your income taxes, you should consult a professional tax advisor. This article is not intended for and cannot be used to avoid future penalties that may be imposed by the Internal Revenue Service.