4 Factors affecting financial wellbeing
If you’re feeling concerned about your finances, you are probably looking to take control of your financial wellbeing. To help you get there, we’ve put together 4 common factors that affect financial wellbeing, and provided tips for you to take control (when you can).
4 factors that affect financial wellbeing:
1. Financial literacy
Early and frequent exposure to practical financial knowledge like how to budget, make financial plans and set realistic financial goals are all key elements of financial wellbeing. While you can’t control whether or not you were exposed to financial literacy during your adolescence, there’s no reason why you can’t learn new skills to enhance your financial wellbeing today.
Take control: If you lack skills in certain areas (budgeting, financial planning, etc.), build your financial knowledge by accessing free tools and resources from the Government of Canada here. And, since you’re already here, you can continue to browse the articles on our website to learn financial tips, budgeting ideas and more.
2. Financial resilience
Are you able to overcome financial setbacks and unexpected expenses? It’s almost a guarantee that you’ll face financial challenges, so having the resources to manage these situations – whether it’s an emergency fund or the emotional and knowledgeable support of friends, family members or a financial advisor – is incredibly important to your overall financial wellbeing. If and when you’re caught in a financial pinch, you want to have the money you need to see you through, and advice from someone you trust.
Take control: If you haven’t started an emergency fund yet, there has never been a better time than now. Learn more about how to make room for an emergency fund in your budget here.
3. Realistic goalsetting
If your financial goals are overly ambitious, they may cause you to feel a sense of repeated failure rather than wellbeing. As in any task, setting realistic, achievable goals that build on one another is key. To learn more about what type of financial goals you may want to consider, read our list of 10 financial goals that can help you reset your finances.
Take control: Set realistic goals for yourself and write them down. Put your goals somewhere visible, like on a mirror or your fridge, so you can see them frequently and cross them off as you achieve them.
4. A long-term vs. short-term perspective
People with a short-term financial perspective tend to be more focused on the income and expenses that will get them what they want now. This can cause a more materialistic, “keeping up with the Joneses”-type approach to spending money, which can quickly lead to a cycle of overspending. If you want to live within your means, think long-term. What do you want life to look like in 5, 10, 15 years? How can you set realistic goals to get you on a path toward that plan?
Take control: Every time you get the urge to make a materialistic purchase, try to justify the expense within your long-term vision. If the purchase makes sense for where you want to be in 5 or 10 years, it has more value than something that will being only short-lived enjoyment.
Although many people would guess that income is a key factor in financial wellbeing, in reality it isn’t. Once a person has enough money to satisfy their basic needs like shelter and food, money stops being a factor in happiness. In the end, it is our ability to control day-to-day finances, weather financial setbacks, be on track with a financial plan and feel free to make the choices that are right for us that contribute to a sense of financial wellbeing. All the money in the world can’t help someone who overspends without a plan and has no sense of groundedness in who they are and where they are going.
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