How to Assess your Financial Wellness

Financial Wellness, a new term for me, is all the rage. In fact, many companies offer financial wellness as an employee benefit. But many may ask, what is financial wellness and how does it help you? Below is a general summary, and please feel free to post in the comments section for any follow up questions.

Financial wellness is not just about your net income, but its about having to experience positive financial outcomings, having a strong financial foundation of living within your means, having no debt, and that you are on track to meet your financial goals. The financial wellness will help you provide a comprehensive assessment of your financial being, and helps you answer from basic financial questions:

• How financially stressed are you? Do you feel overwhelmed with debt, which creates stress on yourself and your family?
• Are you living within your means? You should look through your historical spend and see if you are spending more than you are making. 
• How much do you have in emergency savings? You should be saving up somewhere between three and six months’ worth of your monthly expenses.
• How much and what type of debt do you have? When it comes to high-interest debt like credit cards and personal loans, the less the better. However some debt is considered “good debt”, such as a mortgage and other low interest rate debt.
• Are you on track to meet your future financial goals? The most common long-term goal is retirement and your best bet is to run a retirement calculator to see if you’re on track to hitting your goals. You should forecast on the conservative side and there are many calculators out there to help you with this. I usually recommend assuming an inflation rate of 3%, and an average return of 5%. You should also forecast how much your expenses will be in retirement.

If your financial wellness is not where you want it to be, and you are concerned, you may want to reach out to a financial professional. They can help you put together a plan to improve your financial situation. I would interview several financial professionals before selecting one to make sure you get qualified and unbiased advice.