A few weeks ago, I posted an article titled Recessions are inevitable. Take care of your financial health and well-being, which looks at four essential tips to help Canadians weather tough economic times and sparked a conversation around what is financial success. In this blog, I share what financial well-being is made up of and 3 elements to start improving your financial health.

Financial success means different things to different people. To some, it means being out of debt, having money left over every month, increasing your net-worth, or being financially independent. But, with nearly half of Canadians feeling stressed out about money, more so than their work, health, or relationships, I believe many people want to know how to achieve financial well-being.

I define financial well-being as having money left over after your expenses to save and invest, while feeling in control of your finances, and feeling financially secure, now and in the future. Even when life throws you curve balls, because it will.

Financial well-being is made up of two parts:

• Your financial wealth (how and where your assets are invested), and,
• Your financial health (spending, saving, borrowing, and investing behaviors & habits).

So which one is more important – your financial wealth or health?

It goes without saying you need the right investments to increase your net worth – financial wealth. But, if your financial health – your behaviours and habits around investing, spending, saving and debt – are off the rails, you are not likely to get ahead fast or achieve financial well-being.

Both are important, and I will address financial wealth in future blogs. Today, I want to share three things you can start doing right now to get you on the road to improving your financial health.

#1 Own how you feel about your finances, or it will own you!

Many think there is nothing touchy-feely about money and finances. In fact, it can be an emotional trigger. Good or bad, we all have different attitudes towards our finances, which come from beliefs shaped during our childhood, past experiences, or learned over time.

The good news is that we can accept and adjust our attitudes and behaviours as we become aware of what’s holding us back. Like anything, you have to be committed to it to make things happen.

#2 Make your finances a priority and spend time with them regularly

How you spend your time is generally a good indicator of your priorities and what's important to you. If improving your financial health is essential to you, schedule time in your calendar and do it weekly, bi-weekly, or monthly.

Canadians spend on average 7 hours a week worrying about their finances, which is 364 hours a year.[1] Why not spend one hour per week proactively dealing with your finances, paying bills, reducing debt, figuring out where you can cut expenses? Maybe that one-hour investment will cause you to worry less about finances, and you might just reclaim the other 6 hours. Much like starting a new exercise regime, it may feel awkward at first, but over time, it becomes a habit – a good habit!

#3 Do a financial health check every six months

We are familiar with a health check. Our healthcare professional checks our blood pressure, weight, body mass index (BMI), and blood work to get a sense of our current state of physical health. Subsequently, they may recommend lifestyle strategies to improve specific measures. A financial health-check is similar in principle.

Quick 6 questions health check (answer Yes, No, or Don’t Know)

• Do you ever go into debt to buy something that is not a necessity?
• Are you satisfied with where your net worth stands right now?
• Do you have and maintain a budget?
• Are you financially prepared to face unforeseen events such as death, illness, disability or unemployment?
• Have you thought about your top three financial goals and planned how you're going to achieve them?
• Have you ever felt you've made investment mistakes? If so, how have you dealt with them?

If you’ve answered No or Don’t Know to any, consider investing time to improve your situation. If you are interested in a full financial health check, contact me.

Much like your physical health, there are always elements to improve on with your financial health. The purpose is to identify which items need attention, then prioritize the top one or two that need to be dealt with first. Then put a plan against it and review every 3-6 months to check on your progress, celebrate successes, and determine where next to focus your efforts.

You’re not alone

If you're one of those Canadians who really enjoys managing your finances, Congratulations! You are in the minority. In my experience, 10% of people enjoy managing their finances, so if you are in the other 90%, you are not alone. There are financial coaches that can help you with both your financial wealth and health. Remember there are two parts to the equation.

Improving your financial well-being is a process and a journey. If you’re interested in learning more about financial health, please feel free to reach out.

JF

 

[1] MoneyMindfulness poll by Capital One Canada and Credit Canada Debt Solutions