Financial wellness can be part of an overall health wellness program. The Financial Consumer Agency of Canada stated that “mental, physical and financial wellness are three pillars of good health”. They say this with great cause and conviction as nearly half of Canadians have lost sleep over financial stress. Almost as many, according to a 2018 survey conducted by the Canadian Payroll Association, would face great financial strain if a paycheque came late.
The concepts of physical wellness are well promoted through health institutions and include a balanced diet, physical activity, and healthy life choices. The importance of mental well-being in the form of self-care and mindfulness are gaining awareness through channels beyond healthcare practitioners. Its importance has been highlighted more so during the pandemic.
In my experience as a Licensed Insolvency Trustee (“LIT”), the concepts of financial health and financial well-being continue to elude Canadians as it doesn’t receive the same public boost as physical and mental health wellness. Let’s face it, in our consumption-driven world saving money through good money management skills isn’t a “cool” topic. No one posts to their social media feed pictures of the money they saved by not vacationing in exotic locales, not eating what’s trending, and not buying the latest fashions.
However, setting financial goals and achieving them is very rewarding. Self-discipline today will reap rewards in the future. So how do we get there? The same way as a physical health goal – through discipline, habit, and routine. First get organized, write out a list of goals and a timeline. Take stock of your debts, interest rates, payment amounts and due dates. Be aware of your income and all of your expenses.
Goals: Any financial wellness program needs realistic goals
Set a realistic financial goal and if necessary, break a bigger goal into smaller goals that can be achieved in an appreciable time frame to avoid discouragement. If you set out to lose 100 pounds, you may be discouraged at how long that would take. Aiming for a few pounds a week or month would help keep you motivated. If all you do is aim to be debt-free or have $100,000 in savings, you would be demoralized if that doesn’t materialize, especially since no due date was set. Aiming to save 5% of every paycheque or pay off your highest interest debt $50 a week at a time is realistic and measurable.
Although there may be more complex issues at hand, conventional weight loss wisdom focuses on a caloric deficit. If you burn more calories than you take in, you will lose weight. Budgeting is the same. As long as you spend less than you earn, you will achieve savings. Examine every expense and decide how well they align your financial wellness goals. What is more important? The expense or the feeling of wellness that will be achieved if you had that much more money to put towards emergency savings or paying off debt.
Running on a treadmill is great for your physical health, but unless that treadmill is powering your house, when it comes to your financial well-being you will need a different kind of exercise. That is an exercise in discipline. Knowing how a need is different from a want. After covering the necessities of life, you need to focus on what spending will get you closer to achieving your goals, and which do the opposite. I am not suggesting that you lead a monastic life but look for savings and efficiencies to move you closer to financial security. Is there a cheaper coffee shop? Can I get that runway look for less? Don’t deprive yourself, but at the same time don’t overindulge. My grandfather’s depression-era wisdom is still correct today: if you pinch pennies hard enough you will get nickels.