Three core principles for financial wellness
Three core principles for financial wellness
When it comes to financial wellness, what does this actually mean? We usually use the term “wellness” in the context of our physical health, but how does this extend to our finances too? To us, financial wellness means creating a holistic financial plan that allows you to reach goals in other areas of your life too – including your personal development, your family, your physical health and your career. It also incorporates looking at your business, so that you can ensure the wellness of your business and your employees.
A 2020 baseline survey on financial literacy in South Africa by the Human Sciences Research Council (HSRC) found that nearly half of adults surveyed (46%) tended to live for today rather than plan for their financial future. In addition, the survey found that 44% of adults are not actively saving for any financial goals. While this could point towards a strained economy, it could also speak to a lack of education about exactly how to save for a secure financial future.
In the spirit of financial wellness, here are three key principles we at CFSG teach our clients to help them develop financial goals that are aspirational, yet still attainable.
1. Every individual’s “big picture” looks different.
Depending on your individual challenges, preferences and goals, your view of financial success will look different to someone else’s. Perhaps you want to own your own home – or maybe you want to save money to be able to tick off a bucket list travel adventure abroad.
Or, perhaps a more pressing goal is to be able to send your three children to university, or to knock down a large debt you may have. Whatever the case may be, lifestyle financial planning will depend on these or other individual goals. To illustrate different financial goals, we first identify the main “life” areas that matter most to you. What are your goals within these areas? Then consider your family structure: what does it look like? And what other limitations do you have? The better you can answer these questions upfront, the more effective your financial plan will be.
2. Things change depending on your stage of life.
When you’re just starting out in your career, for example, your main financial goal may be simply to cover your monthly expenses with your income. As the years go by, you may want to focus on saving for a deposit for buying your own home. If you decide to have a family, your priorities may shift again, as you look towards providing for your children and educating them.
Further along the line, you may be wondering what financial stability will look like when you retire, and what your succession plan will be for your estate when you’re no longer around. An effective financial plan means taking into account where you’re at in life now – and where you’re going. This may incorporate one or more of the following factors located in our lifestyle financial planning diagram.
3. Financial health impacts every area of your life.
Financial wellness goes far beyond simple financial security.
When we’re financially secure, we have the comfort and confidence to fulfil the other wellness needs in our lives – whether that’s feeling more connected with our loved ones, creating more balance in our lives by resting and doing activities that are inspiring to us, or prioritising our physical health and wellness.
It also results in increased motivation – which has a positive knock-on effect on our mental health, as well as the wellbeing of those around us.
Achieving financial wellness is multi-faceted and helps you unlock life experiences and long term wealth beyond just financial security. Cultivating a holistic plan incorporating everything from budgeting and saving to investing or managing debt can help you to reach your other life goals too – whether it’s in your personal capacity, for your business, or both.
If you need assistance with crafting a financial plan that contributes to your financial wellness, contact us today.
SHARE THIS ARTICLE