Tune into any finance-related TV channel or website and invariably the topic turns to “financial wellness” or some derivation of it (financial independence, financial freedom, fiscal fitness…) Whatever the moniker, the concept of achieving financial nirvana is often misunderstood.
It’s not defined by being completely debt-free and/or wealthy. It’s also not about adopting a frugal approach to spending. To be financially “well” means gaining control of your financial life in ways that support and promote financial stability in the context of your unique situation.
Financial wellness looks different for everyone, but it generally involves three key areas of focus:
- Planning for the future
- Setting goals and working towards them, and
- Proactively and regularly assessing your finances.
Seems obvious, right? You’ve probably already have some general goals in mind (pay off student loans, buy a house, start a retirement plan, etc.) Well, here’s the rub: This isn’t a one- and-done exercise. The way you manage your money will most likely change at different ages and stages of your life. That’s why we advocate a holistic approach to financial wellness.
Holistic planning takes into account your needs across time and across your complete financial profile. Consider how financial status and responsibilities change as you move from “footloose and single” to married with kids and a mortgage. Will you enjoy steady career progression — or be derailed by a health crisis? Will your appetite for financial risk increase or decrease over time? Do you envision a retirement of globetrotting…or caretaking?
With every life event, your goals and priorities shift. Which means you need to have your eye on multiple facets of your finances. For instance, it’s only natural to want to put every extra dollar toward reducing that mountain of debt. A worthy goal — but where does that leave your retirement nest egg? And what if you lose your job? You’ll be back to racking up debt.
As you can see, tackling your finances with piecemeal or temporary fixes won’t give you the best coverage. By adopting a holistic strategy that addresses all areas of financial wellness — asset protection, debt elimination, investing and income growth — you’ll make your money work more productively and meet your goals faster. Taking the long-term view is a strategic move that keeps you focused and in control of your destiny. Destiny as you define it.
