Improving your financial wellbeing is paramount to financial freedom. Times are tough, Kiwi’s focus is on their bank accounts, and the media is churning out headline after headline, recommending to ‘prepare for a recession’. This kind of scaremongering detracts from our personal power! You can live the way you want to, splurge on little treats every now and then, while still feeling in control of your finances and transforming your future.
We’ve found in New Zealand Aotearoa, around 86% of people surveyed are over confident with their money and are seriously undersaving. To add further calls for alarm, just under 30% of the respondents surveyed said they could last only for a month or less without earning an income. These two stats call for some serious hubris in our financial resilience and wellbeing.
With this in mind, we thought it was high time we weighed in on how to improve your financial wellbeing.
What is good financial wellbeing?
Financial wellbeing is feeling both secure and in control of your finances. This includes: any debts (mortgage, credit cards), recurring payments (insurance, car, internet), and ad-hoc payments (food, fuel, and power). Look at making the most of your money every day, from dealing with unexpected events and being on track to a solid and secure future.
What is meant by financial wellbeing?
It’s known by many names: financial literacy, financial wellness, financial confidence… etc. Simply put, it’s feeling confident in yourself and your relationship with money.
What are the three levels of financial wellbeing?
There are plenty of mixed messages out there which makes it all the more confusing to feel empowered and ladder up to good financial wellbeing. This is what we think:
1. Financial Strife
The toughest situation to be in. You will likely feel out of control, you’ll be having a hard time financially regardless of your income, and you are unable to manage debt. If you find yourself in this, there’s no shame in speaking up and asking for help. Sometimes getting an outside perspective is all you need to clear up some of the spending or accumulation of debt habits. To get out, you’ll need to learn the basics of financial wellbeing and get the ball rolling to break out of the cycle and make it to the next stage.
2. Financial Shifts
In this situation, you are aware of your incomings and outgoings, and you have reached out for help from a professional (like one of the financial advisers at Money Empire) to get through these tough times. Making these changes are imperative to keep the cycle breaking and ensure you don’t regress. Creating curiosity and openness towards your relationship with money will be paramount to succeeding. You’re putting plans in place like a budget, putting money aside, and accumulating wealth.
3. Financial Stability
Here you are protected, safeguarded, confident, and in control. You are living the life that you want, staying within your budget, and have allocated regular check-ins with your financial adviser. Money is now a choice, and something that seems to have power over you. If you have debts, you are working to pay them off in a timely manner. Savings are stacking up, and any investing that you are doing is helping your money work harder for you. Insurance is tailored to you, and your empire won’t be crumbling any time soon.
How to improve my financial wellbeing?
It starts with a good education. There are heaps of free courses free information online (such as Sorted) who are here to help. Plenty of professionals have also studied finance and specialise in financial wellbeing, working in this sector day in and day out.
Save regularly, even if it’s only $20 a pay cycle. That means you are $20 ahead of where you could have been. Use your credit cards effectively, if you have one (however we reckon you don’t even get one if you can avoid it)! Your credit cards can be ‘gamified’, with options out there that suit your lifestyle.
Check you’re on track with your budget weekly and build good money habits. Track your spending, and if you have a partner, set aside time to have open and truthful discussions around saving, spending, and debt. Finally, plan for your retirement.
What is financial literacy?
To summarise: the ability to look at your finances, make changes where necessary, and if you are taking on debt, you know exactly how things are going to work. New Zealand Aotearoa has pretty scary statistics around financial literacy, as financial literacy dropped to 44% – a 6% decrease from last year.
Why is financial wellbeing important?
Being on top of your finances has a direct correlation to your overall health and wellbeing. It’s not just a buzzword! Before the pandemic, a lot of people were in dire straits, or really one unexpected event away from losing everything they have worked for.
Despite the overall upward trends in our country, we’re seeing 40% of people unable to raise $5,000 in a week to deal with a sudden emergency. The statistics are also reporting people are woefully unprepared for retirement. Cost of living is rising, and the superannuation isn’t quite enough to live on these days, especially for those living in a big city. Preparing for retirement is part of financial wellbeing, even if it’s over five decades away.
Good financial wellbeing ultimately makes you feel in control of your life and your money – of course this would be important.
How is a business impacted by employees’ financial wellbeing?
New Zealand Aotearoa is an economy backed by small business, accounting for 97% of the firms. Employees with less stress around their finances report being happier and are ultimately more productive. Retaining employees is paramount to saving cash in the long run. When consumers set money aside for their future, or for an unexpected item, it keeps the economy churning!
To summarise financial wellbeing
Being on top of your money helps you achieve financial freedom and eases money worries when the unexpected happens. Are you ready to take the next steps? Reach out to one of our financial advisers, and together we can work towards improving your financial wellbeing.
Please note everything in this article is to be taken as generalised advice, not personal advice. If you are seeking personal advice you must reach out to a professional financial adviser.