Financial Advice Blog

6 ways to improve your financial wellbeing

Your relationship with money can greatly affect your quality of life. Here, six ways to improve your financial wellbeing for a happier, healthier future.

Financial wellness is the term used to explain how you feel about your current and future financial position and the amount of anxiety it creates for you. Measured on a scale from severely financially stressed to financially secure, an AMP report has found that 1 in 5 Australians are currently being impacted by financial stress, adding up to a staggering 2.44 million people in 2018. While those numbers are an improvement from a few years ago, there’s no denying work still needs to be done here. Here are six ways to improve your financial wellbeing for a happier, healthier future.

1. Set an emergency fund

Sudden unexpected expenses are a reality of life, but they’re also the biggest cause of current financial stress according to the AMP report. The report found that having a rainy day stash of $4,000-$5,000 greatly reduces financial stress when these unexpected costs creep up, so start putting money aside now for when those times hit. Even a small amount every month quickly adds up, plus it reduces the risk of opting for a high-interest borrowing options when you’re really stuck.

2. Commit to clear goals

Setting clear, measurable goals when it comes to your finances is a great way to stay motivated and know what you’re working towards. It can be hard to stay on track and reduce discretionary spending when you’re not clear on your future goals. Having a financial path laid out for you makes saving and staying on track much easier. Once you’ve identified your goals, commit to them and continue to work towards your goals with every pay check that comes in.

3. Tackle the problem head-on

If you’re currently feeling the financial pinch, know that there is a way out. AMP’s research identified that those who had been financially stressed in the past were able to recover within about two years with behavioural and mindset changes, as well as help and support from those around them. The key takeaway? Tackle the problem head-on. This means adopting a holistic financial plan, setting goals and taking action immediately. Basically, you need to go all-in with your recovery in order to overcome it and move on.

4. Get paid monthly or fortnightly

When it comes to financial wellbeing, monthly pay cycles have the most positive impact of all as they give you the satisfaction of bigger numbers. Why does this help? Well, behavioural economics tells us that when people have scarce finances, like a smaller amount more frequently, they’re less likely to think long term and prepare for the future. That said, fortnightly cycles are also beneficial as they help you pay off debts more frequently, reducing your interest in the long-term. If possible, switching your salary from weekly to monthly or fortnightly payments could make a big difference to your financial outlook.

5. Recruit an accountability buddy

AMP’s report found that while no group or demographic is immune from financial stress, single parent families getting by on one income while juggling childcare and work responsibilities continue to be most at risk, with one in three suffering from financial stress. Sometimes, all it takes is sitting down with someone you know and trust to help you set your financial goals, get you back on track and hold you accountable. Enter: an accountability buddy. Your accountability buddy might be in a similar financial situation as you, or perhaps they’ve come out the other side and want to cheer you on. Whoever it is, having someone there to talk and navigate you through your financial stresses can make all the difference to your financial wellness.

6. Seek out a financial advisor

When it comes to money matters, no one is more adept at solving problems than a financial advisor. It’s their job to help you navigate the rocky terrain of financial stress, while also helping you find a plan and set goals that work for you. There’s no shame in seeking help, so reach out to a financial advisor that has your best interest at heart and get professional help so you can go from financial stressed to financially secure once and for all.

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