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What does it mean to be financially well?

These days the term ‘financial wellness’ is being more widely discussed but what does it actually mean?

At Salary Finance we define financial wellness as a state of being where a person can fully meet current and ongoing financial commitments, can feel secure in their financial future, and is able to make choices that allow them to enjoy their life.

There are four elements within this that make up an individual’s financial wellbeing:

  1. Being in control of day to day finances
  2. Having the freedom to enjoy life now
  3. Having the capacity to absorb financial shocks
  4. The ability to pursue longer-term financial goals

To move towards being financially ‘well’ there are several steps that can be taken and we’ve outlined them below: 

1. Manage debt

Step one is to clear any problem debt. Dealing with this makes everything else possible.

2. The ability to deal with a crisis

Creating resilience through savings provides a back-up in case of unexpected expense.

3. Get organized 

Building an understanding of what you have and where it is going creates security in the present and provides a foundation to start thinking about the future.

4. Set a goal 

Once the present is secure you can start to think further ahead, including your long-term financial goals, like preparing for retirement.

Being financially ‘well’ isn’t dependent on earning more money – it is completely achievable to become financially ‘well’ without earning a large amount of money. Equally, there are some very well-paid people that would be considered financially ‘distressed’.

The steps to financial wellbeing are based around dealing with debt, the basics of money management and building positive habits that build towards a financial well future.

Remember Salary Finance is here to help you every step of the way -  to explore the financial support available to you, click here and select your employer.