11th April 2023

The journey to financial wellness

What is financial wellness?

Financial wellness is a concept that has gained increasing attention in recent years. Why? Well, people have become more aware of the impact that financial stress can have on their overall health and well-being. Essentially, financial wellness refers to the state of being in control of your finances and feeling confident and secure about your financial future.

It means having a clear understanding of your financial situation, including your income, expenses, debts, and savings, and being able to manage your money in a way that aligns with your financial goals and values.

Contrary to belief, financial wellness isn’t just about having a lot of money or being debt-free. It’s about feeling in control of your finances and having the ability and conviction to make smart financial decisions that support your long-term financial goals and values.

What’s caused a buzz in financial wellness lately?

In today’s world, financial wellness has become more important than ever. With the rising cost of living, job insecurity, and economic uncertainty, it’s no wonder that more and more people are feeling stressed and anxious about their financial situation.

A study by Champion Health found that financial pressure is the biggest cause of stress for UK employees outside of stress – 37%. Breaking it down even further, female employees are 33% more likely to feel financial pressure than their male counterparts.

However, the good news is that there are steps you can take to improve your financial wellness and achieve greater financial security. Continue reading to understand why financial wellness is important and how you can achieve it.

Why is financial wellness important?

Financial wellness is important for several reasons:

  • It reduces stress and anxiety: Stress and anxiety are two of the leading causes of heart disease, diabetes, migraines, depression and more. By achieving financial wellness, you can reduce your stress levels and improve your overall mental health.
  • It improves your quality of life: When you feel in control of your finances and are able to meet your financial goals, you have greater freedom and flexibility to pursue the things that matter most to you, whether that be travel, hobbies, or spending time with loved ones.
  • It increases your financial security: By taking steps to improve your financial wellness, you can increase your financial resilience and ensure that you are better equipped to handle any unexpected expenses or financial challenges that may arise.

How can you achieve financial wellness?

  1. Set financial goals: Setting clear and achievable financial goals is the first step towards achieving financial wellness. This might include saving for a down payment on a house, paying off debt, or saving for retirement. By setting goals and working towards them, you can stay motivated and focused on your financial priorities. Check out our Goal Mapper to get started.
  2. Create a budget: A budget is a plan for how you will spend/ allocate your money to various things. It can help you to understand where your money is going and identify areas where you can cut back on expenses or allocate more money. By creating a budget, you’ll be able to see where you can free up money to invest and work towards your financial goals.
  3. Have an emergency fund: Having an emergency fund can provide a sense of financial security and peace of mind. There are lots of different schools of thought on how big an emergency fund should be, but it really depends on you and your lifestyle. Typically people aim to save at least three to six months’ worth of living expenses in case of unexpected events.
  4. Pay off high-interest debt: High levels of high-interest debt can be a major source of stress and can impede your ability to invest and save. Prioritise paying off high-interest debt, such as credit card debt, as soon as possible. (Note, we don’t mean paying off mortgages… some forms of debt are useful and are considered financial tools, but more on that later).
  5. Invest for the long-term: This is something we cannot stress enough about. It’s a core part of the Propelle investment philosophy. We often hear people talking about “investing” in something today and then looking to trade out a week later. That’s not investing! To us, that sounds like gambling. If you’re not a qualified trader, then trading in and out of things is really just gambling dressed up to make it seem like something else. Investing is allocating your money into an investment for a relatively long period of time (we think a minimum of 2 years at least, ideally 5 – 10 years) with the expectation that you won’t be making any changes unless something material (what we call life events) happens. Investing can be a great way to grow your wealth over time, but you have to have a long-term mindset.
  6. Educate yourself: The more you know about personal finance and investing, the more in control you will feel. Read books and articles, and take online courses to learn more about managing your money.
  7. Seek more guidance and help if needed: From support and guidance through platforms like Propelle to consultants and financial advisors there is so much out there for you to choose from. The key thing is to try and be as specific as possible with what it is you need help with so that you can identify exactly the right kind of help you need. Not everyone needs a financial advisor unless you have a certain level of wealth to start with. It might not be cost-effective for you to have one.

Something to remember…

Working towards financial wellness is an ongoing process that requires a combination of planning and action. As you go through different stages in your life, financial wellness may mean something different in various seasons. Be patient with yourself and give yourself credit for the progress you make, no matter how small. Remember you’re part of the Propelle community now, so you’re not alone. We’ve got you!

Propelle does not provide investment advice. If you are unsure about anything, please seek financial advice from an authorised advisor. Your capital is at risk.