Lately, these term “wellness” seems to pop up in areas where you don’t normally expect them, like finances. Financial wellness is a phrase commonly used in reference to personal finance management—but what does it really mean and why should you care about it?

In the physical sense, “wellness” refers to your overall well being and outlook, and is defined as a state of being in good health‡, especially when pursuing a set goal. In the financial sense, similar meanings can apply, which explains why the term has been used more and more. Your finances influence many aspects of your life, as well as your goals, which is why understanding your financial wellness should be a top priority.

Understanding your financial status

In some cases, financial wellness may refer to your overall financial status and its impact on your day-to-day life. Are you comfortably able to afford your everyday costs? Do you have the funds you need to cover unexpected events or emergencies? If you have a good sense of your monthly and yearly expenses and income, you may be able to easily answer yes to questions like these.

But, other questions may be more difficult, like do your finances negatively impact your emotions or relationships? If you find yourself worrying about making ends meet, or being unprepared if your car needs repairs, it may be time to review your financial status so you can take steps toward improved financial wellness.

Monitoring and tracking finances

Another financial wellness perspective is one that emphasizes the simple act of being aware of your financial decisions. If you don’t know what your average bills amount to, or your income fluctuates, monitoring your daily balance and transactions is a good first step to understanding your overall financial picture.

Just like an activity tracker can help you take more steps, drink more water or eat healthier, establishing financial tracking habits can help you make more informed expense decisions. For instance, if you check your account balance every morning, you may decide to eat out less because you see how those transactions chip away at your total. Daily monitoring and habit tracking are aspects of financial wellness that can make you more aware and mindful of all your financial decisions.

Setting financial goals

If you know your financial status and you have established financial monitoring habits, the next step is to ensure you have identified short- and long-term financial goals. Goal-setting looks different for everyone. A post-it note on your bathroom mirror may be all you need to remind you; but for others, it may be helpful to utilize tools and apps that can send daily or weekly reminders to stay on track. Building smaller milestones in a long-term plan with a financial advisor can also help make the journey to your end-goals easier.

Regardless of how you view financial wellness, setting and implementing goals is a vital component that shouldn’t be overlooked. So, if 2022 is your year to tackle debt (or build up your savings, or buy a house), set milestone goals for each month to help get you there.

Getting started

Achieving financial wellness is all about your perspective—what is most important to you as you map out your finances for the year? Review your lifestyle, opportunities and wish lists to build a healthy and balanced financial plan.

For more information on financial wellness, review our Financial Education Center: Health and Wealth playlist. 

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