The Role of Financial Health in Wellness

The Role of Financial Health in Wellness
When one thinks about wellness, the usual things that come to mind are physical fitness, healthy eating, and mental health. I’m still working on all three, however financial health also plays a crucial role in holistic health and maintaining a good state of wellbeing. Financial health is usually overlooked, but it is a vital component of overall well-being. It impacts various aspects of life, including physical and mental health, relationships, and personal development. Let us explore some ways in which financial health contributes to holistic well-being.

1. Reducing Stress: Imagine a credit card statement with five thousand dollars of debt and one hundred dollars in the checking account. This can be a major source of anxiety and stress for individuals and families. These stresses can significantly impact health through means of high blood pressure, anxiety, heart disease, and more. The health impacts of stress can cause a feedback loop and further negatively affect finances thus creating more stress. It’s important to establish sound financial and money management practices to alleviate this stress and improve overall well-being. Having a stable financial situation and plan enables people to focus on other more important aspects of life. Remember money is not the end-all, it’s a tool to live a balanced and healthy life.

2. Maintaining Healthy Relationships: Not only can financial sickness cause stress in your individual life, but it can also strain relationships. I have seen what financial irresponsibility could do to relationships. Lack of communicating spending habits, high debt, and the impact of having poor financial health can strain relationships and potentially lead to break ups and divorce. A study (Divorce Drops A Person's Wealth By 77 Percent, Study Finds (osu.edu)) found that divorce reduces a person’s wealth by about seventy-seven percent. It also found that wealth typically begins to drop four years prior to the divorce.

It’s important to be aligned with financial goals and plans. Open communication of these, shared values, and shared commitment to achieving financial health can help foster mutual trust and understanding and strengthen the foundation of a relationship, leading to increased overall happiness and fulfillment.

3. Securing Freedom and Security: The median balance in transaction accounts—which include checking, savings, money market, call accounts, and prepaid debit cards— amounted to a median of $8,000 according to the Survey of Consumer Finances (Federal Reserve Board - Survey of Consumer Finances (SCF)). I wasn’t able to find the median household expenditure, but according to the U.S. Bureau of Labor Statistics, the average household has $72,967 in annual expenditures (CONSUMER EXPENDITURES--2022 - 2022 A01 Results (bls.gov)), or $6,080 a month. This means that the average household has less than two months in emergency funds not including existing debt payments. If you take into account the median family owing $2,700 in credit card debt, they would be left with less than a month worth of available funds.

Imagine having a job loss and having less than a month to find new gainful employment before the checking and savings accounts go to zero. Having a strong emergency fund and healthy finances provide a sense of freedom and security. A safety net for unexpected situations such as medical emergencies or job loss can be achieved by saving and investing wisely. Knowing that there is a safety net and financial security promotes peace of mind and allows people to pursue their dreams and passions.

4. Personal Development: Having the safety net, budgeting, and saving appropriately enables people to develop themselves without falling into debt traps and creating more hurdles for themselves in life. Whether it is pursuing higher education, attending workshops or seminars, or starting a business, having financial resources opens doors to growth and self-improvement. I’ve met people who saved a healthy safety net for themselves before moving to NYC to take part in a coding bootcamp and change careers. They were able to do this because they saved for it and are better off, making a higher income and being in a career path they are more interested in. It doesn’t even have to be as extreme as what these people did. It could be taking Yoga, learning how to take better photos, or hiring a personal trainer to be fitter and healthier. The ability to invest in oneself enhances confidence, self-esteem, and personal potential, contributing to holistic well-being.

5. Long-term Goals and Retirement Planning: A healthy financial situation allows individuals to plan for their long-term goals such as buying their first home and preparing for retirement. Home purchases can’t usually be done on a whim. People have to save 3% to 20% of the home’s value to make the downpayment on the home. That could be anywhere from $12,483 to $83,220 on the median home (Median Home Prices By State For 2023 | Rocket Homes) not including agent, legal, title, and other fees. Retirement isn’t cheap either. Advisors recommend having 12 times the annual salary for retirement. For a household earning $100,000, that’s $1.2 million in retirement savings (Will Your Retirement Income Be Enough? (investopedia.com)). By setting aside funds regularly and investing wisely, individuals can ensure financial stability during their life and retirement. Ensuring financial stability in retirement can also reduce financial responsibility and strain that children might experience towards their retired parents. This peace of mind paves the way for a fulfilling retirement, reducing stress and promoting overall wellness.

6. Philanthropy and Giving Back: Money is not the end-all, it’s a tool to live a balanced and healthy life. Having healthy finances empowers individuals to make a positive impact on society. Once people have their own needs met, they are able to more actively contribute to charitable causes and give back to the community. This promotes a sense of purpose and fulfillment. The ability to support causes that align with personal values nurtures a well-rounded lifestyle beyond material wealth.

In conclusion, financial health is an essential pillar of holistic wellness. It is not solely about accumulating wealth; it is about achieving a state of balance, security, and peace of mind. By prioritizing financial well-being, individuals can reduce stress, build healthy relationships, pursue personal development, plan for the future, and make a positive impact on society. Financial health, physical health, and wellness are intertwined with one another. Integrating financial health with other aspects of wellness enables individuals to improve well-being and live a healthy, balanced life. Continue reading other articles on this site to hear more about my experiences and insights on achieving financial health, fitness, and healthy living.