How do you feel about your financial wellness? Are you confident when it comes to money or does talking about the topic make you feel a little…well, awkward?
If it’s the latter then you’re certainly not alone – in fact, over a third of UK adults feel too uncomfortable to talk about money with their peers, despite 44% of them regularly worrying about money (Klarna).
Today I want to talk more about financial wellness. Now as a concept, it might seem a little elusive, but at its core it’s simply all about being interested in your own financial wellbeing. To help you get started in being more honest with yourself about money, let’s explore the psychology of money, practical steps to improve your financial health, and the transformative impact it can have on your life. As a life coach who’s had so many conversations about financial wellbeing with others, I really believe that understanding and embracing your relationship with money is one of the keys to moving towards a more abundant and fulfilling life (even if that doesn’t sound true for you just yet).
1. Become More Aware of Your Finances
As I mentioned earlier, so many people shy away from discussing money. If you’ve ever been in a situation where you’ve completely undervalued yourself or charged far too little for your services, you’ll know what I mean.
According to a study by PayScale, a leading salary database, 63% of employees feel they are underpaid. That’s a lot of people putting in so much effort at work only to feel they just aren’t being rewarded fairly – and God, that can feel demotivating. It’s so common for us to pretend that money isn’t a priority, but then we feel the consequences of financial challenges impacting so many aspects of our lives. Perhaps it’s the trip away you turned down this year because you felt guilty spending it on something that isn’t essential. Or perhaps it’s the anxiety you feel in the lead-up to Christmas, knowing you’ll be feeling the effects of the spending in January. If you’re an entrepreneur you probably feel this so intensely, and guilt hits every time you spend on anything other than your business. It feels pretty awful, dealing with this guilt and shame around money all the time.
But I want you to know that these negative feelings can be transformed by just putting just a little more attention on your finances.
As a starting point, let’s bring our awareness now to our spending habits. Tracking every cent spent in a month might sound tedious (and it is), but it really is such a simple yet powerful exercise that helps you see exactly where your money is going and when. All you need is to write it down and notice where little habits add up, or if there’s anything going out that you could do without (note: look at your subscriptions. How many of these are you really getting benefit from regularly?)
When you start building awareness around your spending habits, this serves as a foundation for making conscious and proactive decisions going forward. It puts you in control of your money, not the other way around.
As the saying goes, “What gets measured, gets managed.”
2. Set an Achievable Budget
Okay, now that you’ve got a better insight into your spending patterns, the next step is to set a budget. I don’t want this to be something that completely restricts you or that seems totally impossible. Instead, a well-structured budget is a great tool to eliminate any impulsive spending (yep, like those random additions that somehow always fall into our shopping baskets even when they’re not on our lists). A good budget should help you foster a greater sense of consciousness about your financial decisions – and that’s always a good thing. In a survey by the Consumer Financial Protection Bureau, it was found that people who budget regularly are more likely to report feeling in control of their finances and have higher levels of overall wellbeing.
And that’s what I want for you, too.
Doing this also allows you to enjoy your money more. When we have such an unconscious approach to spending, it’s all too easy to get impulsive. However, when we budget – whether that’s weekly or monthly – we allow ourselves to live in a more balanced way. For example, being more mindful of your spending with regards to your budget can also influence how you value your time and skills. As you become more aware of your financial situation, you’re far more likely to feel empowered to ask for a raise or set prices that reflect your true worth.
So once you’ve reviewed your spending and set your budget, I want to look at what you’re being paid and whether you think that’s right. I want you to feel confident enough not to settle if it doesn’t match up to what you know you’re really worth – and to build up that courage to ask for more if that’s what you feel is needed.
3. Build Your ‘F**k You Fund’
Beyond budgeting, consider creating a ‘F**k You Fund’ – a financial safety net equivalent to four months of your living expenses. This fund acts as a buffer, providing you with the freedom to say ‘no’ to any projects or opportunities that don’t align with your values or goals. Just knowing you have this reserve will really help to build your confidence, stability, and the courage to stay true to yourself and your work.
The more you say ‘yes’ to the things you don’t enjoy or that don’t serve you, simply because you need the money, the less joy you will get out of what you’re doing right now.
Your ‘F**k You Fund’ is your gateway out of the things that grind you down and onto the path of things that light you up.
And that’s always where we want to be headed, right?
4. Take the Leap into Investing
Once you’ve established your ‘F**k You Fund’, it might be time to explore investment opportunities. You might want to consider traditional options such as savings accounts, where banks typically offer around 4% interest annually. So if you’ve deposited €1,000 into savings, that’s €40 you’re getting back each year. Even if this doesn’t seem like much, it’s still a positive step towards growing your financial wellness.
For a more diversified approach, you might want to explore index funds tied to market performance. These funds, like those tracking the S&P, historically yield around 10% per annum. If you’re feeling adventurous, dipping your toes into the world of cryptocurrency is an option, though it does come with risks. For some people, it’s paid off brilliantly, whereas for others…well, it’s been pretty much the opposite!
If investing leaves you scratching your head, not knowing where to begin, I really recommend engaging with a financial advisor. They can provide personalised guidance based on your unique situation, and the great thing is that many of them offer an initial consultation free of charge.
When there’s nothing to lose, then it’s definitely worth having the conversation.
5. Embrace the Financial Wellness Journey
In essence, the key message I want you to take away today is not to shy away from money. It’s not something to be ashamed of wanting – instead, it’s a powerful tool that can either open up huge opportunities or really limit your choices depending on how your financial wellness is.
As the renowned financial expert Warren Buffett once said, “The best investment you can make is in yourself.” Going forward, I want you to approach the learning process with curiosity and embrace the initial discomfort, knowing that investing time and effort into improving your financial wellbeing is an investment in your present and future self.
If you want someone to help support you as you embark on this journey, I’d love to chat. Get in touch and together, let’s get you taking back control of your finances, making more money, and achieving that peace of mind you’ve been chasing for too long.