Financial Wellness Is Critical To Your Overall Health – And Financial Literacy Is The Key – Forbes

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Hand is turning a dice and changes the word “Health” to “Wealth”
The combination of holiday spending and New Years Resolutions makes it easy to see why January is Financial Wellness month. The beginning of the year is often the time that people take a look at their spending, try to determine their goals for the year and set saving plans to achieve them. But financial wellness is not just about money. Being financially healthy is a critical piece of your overall wellness. Financial health is defined as the dynamic relationship of one’s financial and economic resources as they are applied to or impact the state of physical, mental and social well-being. There are many facets to your financial resources including: amount of savings, how much you’ve put aside for retirement, debt to income ratio, ability to earn money and how much of your discretionary income you spend. These resources combined determine your financial health, the state of which directly affects every area of your overall wellbeing.
Financial health can dramatically improve one’s life and prevent hardships. Financial health means you have the ability to reach your goals, take advantage of opportunities and gives you flexibility to pursue your dreams. The only way to achieve financial health is through financial literacy. Being financial literate means you understand the importance of saving early and often to reach short and long term goals (like retirement). It means you understand the difference between good and bad debt, and can avoid high interest credit cards. It also means that no matter your stage of life or income, you know how to live within your means, stick to a budget, and spend responsibly. Finally, healthy attitudes and confidence around money enable you to learn complex concepts such as investing and how to make smart decisions to make more money.
If you don’t understand how to manage your money, you are at risk of overspending, going into debt and not saving enough for your future. Everyone can relate to financial stress; even the wealthiest people have felt financial pains at one time or another. Debt and/or a lack of savings can cause considerable hardship on a person’s life. And it doesn’t just cause daily stress. Financial problems can lead to divorce, poor health, depression, and bankruptcy. With rising inflation and the continuing COVID pandemic, the below statistics from Bankrate show that plenty of adults are feeling the pressure of financial issues. Many of these could be avoided with some basic knowledge.

Additionally, many adults are faced with crippling debt. The latest Fed data shows that consumer credit card balances rose to $800 billion in the third quarter of 2021. That’s a $17 billion increase from $787 billion in the second quarter of 2021. Overall, the national average card debt among cardholders with unpaid balances was $6,569. That includes debt from both bank cards and retail credit cards.
On top of credit cards, approximately 42.9 million Americans with federal student loan debt each owe an average $37,105 for their federal loans.
These statistics are not meant to scare you, but meant to show how vital financial education is to living a financially healthy life.
Richard Latham, CEO of the mental health app provider Wellmind Health said the mental health challenges of bad financial health is a ticking time bomb that will have a severe and long-term impact for generations to come – and without financial literacy, there’s no way we can stem the crisis.
“Debt and financial concerns can have a serious and sustained impact on mental health, and people living in financial hardship are at increased risk of mental health problems and poorer mental wellbeing. It can already be difficult for people to share when they are struggling with their mental health. This is compounded when the issues are money-related, with individuals also often reluctant to talk about financial problems. The combination of an existing increase in mental health issues due to the pandemic with an end to furlough schemes and personal debt levels rising, means that addressing financial literacy in tandem with supporting better mental wellbeing is a crucial issue.”
Financial companies are also taking note of the importance of financial literacy and the link it serves to overall health. Copper Banking, the platform for teen banking, has a mission of creating the first financial literate generation. Eddie Behrenger, CEO of Copper believes it’s critical to start the education early by giving teens the tools, information and resources to begin their financial life on the right path. “Access alone does not equal literacy. Despite having the greatest digital access in history, we still have astronomical credit card and student loan debt. If we want to put a generation of teens onto firmer financial footing, we have to reimagine the banking experience.”
While it’s best to start young, financial literacy and health can be achieved at any age. The best place to begin is to look at four measurements: what you have, what you owe, what you make and what you spend. From there, you can create your goals and a roadmap to reach them…leading to a financially healthy life.


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