This is the first in a series of three posts on Financial Wellness.*
Wellness is a buzzword that is echoing across industries and platforms and not without reason. Wellness as we know it, is a by-product of several factors. So, in the first of our three posts on financial wellness we will discuss the various components of financial health and what you can do to start on this path and if you are already on it, to strengthen your growth.
First, Financial Wellness refers to overall “financial health of the individual” and is the sum total of spending habits, savings, debt, retirement planning and more. Others define financial wellness as an absence of stress about finances and feeling a sense of comfort or security about finances.
Likewise, the Consumer Financial Protection Bureau (CFPB) has a financial well-being scale that can be used to measure financial health.
The CFPB defines financial well-being as containing four elements: control over day to day life finances, financial freedom to make choices to enjoy life, future capabilities include capacity to absorb a financial shock and preparedness for future financial goals.
Financial wellness has several components: income and expenses being the two most important ones. So, as you learn to effectively manage your economic life, keep in mind these factors:
- There will be factors within your control and outside of your control
- Budgeting and planning for the future will and can significantly reduce financial stress
- Financial emergencies can arise: set aside savings so that when the need arises you borrow first and foremost from yourself and then from a lender
- When borrowing borrow from reputable lenders and avoid falling into the trap of predatory lenders
- Plan for the short term as well as the long term
- Check if your employer offers any financial wellness services and examine how those services might assist you. Studies have shown that access to employee credit at the workplace improves employee financial health even if the employee is not using the service
- Many nonprofit and government agencies around the country are committed to improving the financial wellness of workers
Read what the National Financial Educators Council has to say about money here **
Read here about some current statistics about Financial Wellness in America here **
In short, financial wellness means eliminating or reducing debt, spending prudently and saving regularly.
In parts 2 and 3 we will address the ways in which we can help you develop a plan on the path to financial wellness and how to consolidate that growth.
*The information offered in the above post is not intended to replace the advice of a financial
consultant/financial planner. WorkPlaceCredit® disclaims any responsibility towards an individual’s personal finances. We offer these posts only as conversation starters in the field of financial literacy.
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