What Is Financial Wellness - and Why Does It Matter?

Michael Mechler CFP® CBEC®
March 10, 2022

When a new year starts, many people focus on self-improvement — especially improving health and finances. The good news is that, by working on financial wellbeing, you may be able to improve your physical and mental health, too.

 

Worrying about finances is a leading cause of stress and can contribute to depression, anxiety, fatigue and even lower productivity at work.1 On the flip side, feeling confident and secure in your financial situation may help improve quality of life by relieving stress and giving you freedom to focus on what matters most to you.

 

What does financial wellness mean?

The specifics of financial wellness may mean something different to every person. In general, though, it’s about effectively managing your daily financial life. And it’s a building block to planning and achieving financial goals.

A person who achieves financial wellbeing is comfortable with where they stand financially today and where they’re heading. They feel some peace of mind by having a financial plan in place and understanding how to track progress toward their goals over time.

 

What Is Financial Wellness - and Why Does It Matter/

 

How do you achieve financial wellness?

The steps below may help many people move forward on their financial wellness journey.

  1. Know your current financial situation. It’s often useful to start by getting a complete picture of your current assets and liabilities, including your income and routine expenses (such as mortgage and utility bills). To round out the view of your finances, you might also consider your discretionary spending and saving habits. This information may be used to create a budget, which can help disclose whether you’re living within your means. You may find that you should cut back on some expenses, or you may find that you have more disposable income than you thought.
  1. Set goals. Once you know where you stand today financially and have a basic budget, you can work toward setting realistic goals for the future. These will vary for everyone. For example, people may want to purchase a second home, build up cash reserves, pay down debt, finance a college education and so on.

For many people, retirement is a primary goal. In planning for a comfortable retirement, it can help to consider which expenses may start in retirement (such as additional travel or healthcare costs), which may stop (perhaps a mortgage will be paid off) and which may continue (such as utilities and groceries).

Once you have goals, it’s useful to estimate the cost of each one and a timeline for achieving them. Then you can use your budget to help decide how much to set aside every month to reach each target. Having this plan in place can give you peace of mind over your financial future.

  1. Identify roadblocks. To enhance financial wellbeing, it may help to understand the personal obstacles you’re facing. For instance, some people may be impulsive spenders, have negative associations with budgeting or simply lack personal finance knowledge. Financial blogs and a trusted financial team can be helpful in overcoming those roadblocks, and learning more about financial management and other personal finance topics.
  1. Mitigate risk. Another aspect of financial wellbeing can be protecting against the risk of financial loss. This may include an emergency fund, or life, long-term or disability insurance. These tools may help secure your finances against unforeseen events, such as job loss, serious injury or long-term health issues. Some people may set aside a group of assets in their investment portfolio that could be liquidated to help cover unplanned costs. And, in general, regularly assessing a portfolio’s allocations may present opportunities to buffer against investment risks. 
  1. Review and revise. Financial wellness is a journey, not a destination. Regularly reviewing your overall financial situation and goals can help you stay on-track, adjust for life changes and maintain a sense of financial wellbeing. Many Hancock Whitney clients find that our Wealth Manager platform helps with this task. It provides a consolidated view of all an individual’s accounts (regardless of where they’re held) and includes many easy-to-use budgeting and cash flow tools. It also features a dynamic financial plan, updating in real-time so users can easily see how they’re progressing toward their goals.

 

Your Hancock Whitney team is also here to help. Part of our annual review process includes looking at what’s changed in the last year for our clients, what changes in the legal and economic environment could impact their plans, and how we can work together to keep our clients on track to enjoying ongoing financial wellness.

Talk to an Advisor

 

1 “Data Shows Strong Link Between Financial Wellness and Mental Health,” Enrich, posted March 24, 2021, https://www.enrich.org/blog/data-shows-strong-link-between-financial-wellness-and-mental-health, accessed Jan. 12, 2022

 

The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.

Investment products and services, such as brokerage, advisory accounts, annuities, and insurance are offered through Hancock Whitney Investment Services, Inc., a registered broker/dealer, member FINRA/SIPC and an SEC-Registered Investment Advisor.

Hancock Whitney Bank offers other investment products, which may include asset management accounts, as part of its Wealth Management Services. Hancock Whitney Bank and Hancock Whitney Investment Services Inc. are both wholly owned subsidiaries of Hancock Whitney Corporation.

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