Financial well-being is having the ability and confidence to meet your financial commitments both over the short and long term. It includes the knowledge and skills to make responsible financial decisions such as managing finances, overcoming financial setbacks, and achieving financial goals to allow you to enjoy life.
Here’s how achieving a level of financial well-being can impact your life in a positive way:
Improved overall health
Money is a significant source of stress for many people. In fact, approximately 40% of Canadians identify money as their greatest source of stress. Improving your financial well-being can help reduce stress and positively benefit your overall health. Ongoing stress can directly impact your physical health in a negative way, so improving financial well-being can indirectly lead improvements in the physical effects of stress.
It may also help decrease anxiety, improve your daily mood, and help you sleep better, which will in turn have a positive effect on your mental health.
Higher work productivity and satisfaction
Reducing the stress associated with financial issues can actually help you become more focused and productive in your personal life and in the workplace. A study by Manulife found that people who considered themselves more financially prepared were 22% more engaged at work, 21% more likely to enjoy their work, and 18% more motivated to do their best work than those who felt they lacked a level of financial well-being.
Increased self efficacy and confidence
Improving your level of financial well-being can help you feel more confident about not just your finances, but also your future. As you learn how to manage, overcome, and achieve financial goals and obstacles, you’re building the knowledge and habits needed to reinforce other life skills, along with growing your confidence to see through the many difficult life situations that can and will arise. Skills like patience, careful planning, and restraint in what you need versus what you want are all vital in cutting through the noise of daily life and keeping you focused on what’s important and what will benefit you and those around you in the end.
Improved social relationships
Perceptions of your social relationships can also improve as your financial well-being improves. Financial stress can be a significant potential source of conflict among friends, families, or business partners, whether it’s related to debts, over reliance, or resentment. Having the knowledge to achieve and maintain a level of financial well-being can be critical to ensure tensions between you and others don’t grow out of control. Being financial secure also means you can better reach out and support those people and causes you care about, whether it’s through donations, charity, or other fundraising activities.
Money can’t buy happiness, but it can help pave the road for better health and relationships. Financial well-being is a key component in achieving a better overall quality of life by providing many direct and indirect benefits that can enrich your physical, mental, and social life both now and in the future. You can find more detailed strategies for financial self-care in our article ‘Financial Self-Care Tips’.
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