Why do these presumed differences matter to you? Well, I’d venture to say that each is important and each condition reflects where you are with the other. Financial literacy is a necessary first step, a series of acquired monetary notions and skill sets that can comprehensively lead to financial wellness. These financial concepts must be examined carefully from an individual perspective for many of your financial matters. For other familial planning one would then have to research and make determinations on a level that takes into consideration the needs of those precious loved ones. Becoming financially literate makes perfect sense and is frankly a necessity to have peace of mind about day to day budgeting as well as planning for our future well-being, regardless of current age. And if we've been distracted by life's challenges or unaware of it's importance, chances are there's a need for some catching up and taking the first steps expeditiously toward sound financial planning.
Based on the experts’ definitions of each, I’m not quite sure of the reason for the apparent confusion between the two concepts. Let's jump start your exploration right now, by establishing that there is a direct cause and effect relationship between the two: it is necessary to acquire a general financial literacy in order to truly experience financial wellness. Moreover, an individual who has successfully achieved financial wellness is one who has taken the time to research and study various financial systems (their budgets, their taxes, their current debt, etc...) that can enhance the quality of their present life, with progressing learning and application that leads to benefits for their life in the future ( for example, an exploration and acquisition of retirement savings accounts).
I highly recommend one or all of the following measures to ensure you’re on the path to financial literacy:
“Begin with the end in mind” Habit no.2 of Franklyn Covey’s 7 habits of highly effective people
https://www.franklincovey.com/the-7-habits –
If you haven’t done this yet, meet with an expert, or your employer about setting up a viable retirement account. Think about setting yourself up yourself today according to position you that wish to be in the future. The reason to do this as soon as you’re able, is the potential for growth of this type of account (especially when untouched) over your years of employment. This can put you in a great place once you retire. These accounts generally yield considerably higher returns than a regular savings account. By the way, as a younger professional you may feel like you're not in the monetary position to to start a retirement account. You need not despair. You can start up a 401(K) account with a humble paycheck deduction that is modestly growing and later on gradually increase your monthly contributions. After a period of learning and practice, I’d increase the contributions every single year, for a much greater growth rate and return in the end.
(This is where a financial or life coach can really assist with getting your process started the right way - eggs in order, and in the right baskets!)
Speak with an expert and attend classes about managing debt, and credit status
Doing so will teach you the steps to managing about managing your finances. There are numerous ways to achieve your literacy about managing your bills, current debt, credit status and credit score. Maintaining good credit is extremely important as it can greatly affect the quality of your daily living, and through the years. Considering how much of an impact it has on every aspect of life, it is well worth getting a sound education on sustaining a healthy credit rating.
Get in the habit of keeping up with trends that directly affect your finances
Reading financial newsletters and other literature that gives you the insight you need about your money related goals. I believe that as you gain these insights your strategies should be fine-tuned as you approach each life stage. For instance, if you’re in your early forties, you’ve possibly mastered an understanding of the importance and benefits of savings accounts for present and future needs. By this stage you've possibly moved forward with your choice of retirement planning and you're becoming adept at moving these accounts to the next level: diversification of your money distributions into the funds of your choice, aligned with the professional advise of your financial advisers.
If you’re someone now in the later side of midlife you can still secure these accounts for a better future
I’d recommend you check into getting started with the above advise as soon as possible to gain some momentum on growing your money. After all you're doing this to ensure that you have viable options for a worry-free existence later in life. If you are starting off later in life, you'd want to be checking on your accounts to ensure that you understand how aggressively or conservatively your mutual funds, and any other financial ventures are performing and growing. The goal here is ensure that your accounts are growing!
So what is financial wellness?
I’ve asked various sources about the terminology and definition of financial wellness. I've compiled the thoughts of three of my trusted advisers. They have generally concurred on the idea that financial wellness is the result of making better money choices because one has first made the effort to become financially informed. In other words, you’ll ultimately achieve financial wellness in a most holistic way, when you have invested the time and then equally important, you have then exercised some persistence to progressively build on your financial plan. These cumulative steps to financial wellness then, become much more manageable from one incremental effort to the next. So, how can you tell that you're operating in a state of financial wellness? Well, say for instance, that your 30-year-old daughter is interested in designing a budget for herself and she has come to you for guidance and assistance - she has also mentioned that she’s interested in learning the steps that she can take now, to plan for her future. You’re in the latter stages of your planning based on all that you’ve learned the past few years. Are you comfortable enough to advise her about first steps in her financial literacy? Based on the trajectory that you’ve undergone following the above strategies, it is very likely now, that you are.
Coach Mandy S.
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