In theory, financial wellness is something we all want. But it also sounds a little vague and potentially complex. What exactly does it mean? And, how anyone can achieve it?
Simply put, financial wellness refers to a state where you can handle your current expenses, pay your debts, weather unexpected financial emergencies, and strategize for long-term financial goals. defined by the Consumer Financial Protection Bureau, financial wellbeing (another term for financial wellness) is when “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.”
Contrary to common belief, achieving financial wellness isn’t just about having a sizable income; it’s about how effectively you manage and leverage your resources. This article aims to examine the various elements of financial wellbeing. Specifically, it explores the dimensions of budgeting for health and diseases, emphasizing the crucial role of proactive planning and offering practical tips to achieve resilience in the face of potential healthcare expenses.
Understanding the link between health and finances
In the pursuit of financial wellness, allocating a budget for health and addressing potential diseases is vital. In our current environment, characterized by the continuous escalation of medical expenses, it has become imperative for individuals and families to plan and financially equip themselves to handle unanticipated health-related expenses.
Financial wellness goes beyond managing day-to-day expenses; it also involves preparing for future uncertainties like sudden illnesses or unexpected medical emergencies. Health and finances are intricately linked, as one’s overall well-being is closely tied to our ability to manage healthcare expenses effectively. The rising cost of medical treatments and medications can quickly deplete an individual’s savings, further exacerbating their financial burden. Moreover, prolonged illnesses often result in reduced work productivity or even job loss, adversely compromising both the mental and physical health of those impacted by them.
The importance of self-care in financial wellbeing
Prioritizing self-care is key for both mental and financial wellbeing. By taking care of them, we enhance our ability to make sound financial decisions and manage our finances with increased confidence. Engaging in self-care activities such as exercise, meditation, and hobbies can help us reduce stress, improve our focus and maintain our mental and emotional balance.
Mental health and financial wellbeing are deeply connected; neglecting one will ultimately impact the other.
While it might seem challenging to foster a healthy relationship with money when every health-related action comes with a price tag, investing in mental health doesn’t necessarily have to break the bank. Whether grappling with financial stress or aiming to enhance overall health, allocate time to invest in both. For that reason, in the section below, we’ve put together the most relevant strategies experts recommend for a head start.
Key strategies for achieving financial wellness
Perhaps you don’t fit the criteria for financial wellness yet, but that doesn’t mean you can’t reach that state. Regardless of where you are in your financial journey or how much money you have (or don’t), following these relatively simple principles can enhance both your immediate and long-term financial well-being and security.
- Budgeting and spending: Efficiently manage day-to-day expenses, set up a budget and live within your means.
- Savings and emergency funds: If you haven’t done so already, consider establishing an emergency savings fund, ideally covering three to six months’ worth of living expenses.
- Strategic debt management: Understand the nature of your obligations and prioritize paying off high-interest debts first. This will improve your financial standing and boost your credit score.
- Investments for the future: Diversify your investments to build wealth and ensure long-term financial stability.
- Asset protection: Ensure adequate protection for health, home, and auto to offset significant unexpected expenses and reduce the risk of going into debt.
- Health budget goals: Set realistic budget goals by aligning identified potential health expenses with your financial situation.
The takeaway
Financial wellness is about more than just the numbers in a bank account — it’s a holistic approach to managing your money that encompasses various elements of personal finance. Individuals who achieve financial wellbeing can comfortably meet their financial obligations and handle monthly expenses without teetering on the edge of living paycheck to paycheck. They possess the ability to allocate funds for emergencies as well as short- and long-term goals. They are quick to bounce back from any financial setbacks because they have the right resources and strategies in place.
Sources
- The Connection Between Financial Well-Being and Mental Health (forbes.com)
- Budgeting for Health and Diseases: Achieving Financial Wellness – Infiweb
- https://www.sofi.com/learn/content/what-is-financial-wellness/ https://www.annuity.org/personal-finance/financial-wellness/
- https://www.forbes.com/advisor/investing/financial-wellness/
