Your Financial Health
Financial health refers to the state of a person's financial affairs, including their ability to manage finances, meet obligations, and plan for the future, ultimately leading to financial security and freedom.
Here's a more detailed breakdown of what financial health is:
Ability to Meet Obligations: Financial health involves having the resources and capacity to cover essential expenses like bills, rent/mortgage, and other commitments.
Financial Security and Freedom: It's about having enough resources to meet current needs and also to plan for the future, including retirement and unexpected events, allowing for greater financial freedom and flexibility.
Savings and Investments: Maintaining healthy financial habits includes having savings, investing for the future, and building a financial cushion to weather unexpected challenges.
Debt Management: Managing debt responsibly, including loans and credit cards, is crucial for maintaining good financial health.
Financial Literacy: Having the knowledge and skills to make sound financial decisions, such as budgeting, saving, investing, and managing debt, is essential for achieving and maintaining financial health.
Resilience to Unexpected Events: Financial health also encompasses the ability to cope with and recover from unexpected financial setbacks, such as job loss or medical emergencies.
Financial Wellbeing: Financial wellbeing goes beyond just managing money; it's about feeling secure and confident in your financial future, allowing you to make choices that enable you to enjoy life.
How financial stress impacts our health
Financial stress can have a significant impact on our physical and mental health, creating a three-way link that affects our overall sense of wellness. Studies have highlighted a series of cycles surrounding these three factors that, if not slowed or broken, can cause our wellbeing to spiral downwards.
While it may be difficult to see a direct link between, for example, financial stress and poor physical health, these cycles show just how easily one can impact the other. This article explores why understanding these physical, mental and financial health cycles is so essential to our overall wellbeing.
Financial stress and physical health
Have you ever made a questionable decision when under stress that you later regretted? Sent an email before properly reading it over because you had a mountain of other work to do? Or got booked for speeding because you were running late?
Similarly, financial stress has been associated with high-risk behaviours and impaired decision-making. When we’re worried about money, it can negatively affect the decisions we make in everyday life. While some decisions made under stress can have minor consequences, others can lead to injury and poor physical health.
Stress itself, including financial stress, can manifest in physical ways in the form of exhaustion, muscle tension, body aches and insomnia. The effect of financial stress can also stretch across a broad range of more serious physical health conditions.
Financial stress and mental health
Financial stress is also associated with poor mental health. Worrying about paying bills and supporting a family, plus concern for the future and retirement, can lead to psychological conditions like anxiety and depression.
Some may also view financial status as an indicator of individual success. This can ultimately reduce a person’s feeling of worth when comparing their own financial situation with that of others. If someone feels like they don’t earn enough money in comparison to their friends or family members, they may experience a downward spiral in their mental state. If not treated in a timely manner, financial and mental health challenges can build up and worsen over time.
The three-way cycle – physical, mental and financial health
When physical or mental health take a turn for the worse, it can be expensive to treat. The cost of treatment can create or increase financial stress, particularly if a person’s finances weren’t in great shape to begin with.
Financial stress may also force people to delay receiving care for a medical condition due to out-of-pocket costs. Delaying treatment can lead to physical and mental conditions becoming more severe over time, which can snowball into more complex and expensive treatment being needed – leading to even greater anxiety about financial, physical and mental wellbeing.
As time goes on, for some the physical-mental-financial health cycle can become difficult to break.
How to break the cycle
Thankfully, there are a number of practical things you can do to break the financial stress cycle and get back on track, even during times when cost of living pressures are high. The best way to break the cycle is to tackle it at the source – by getting your finances to a place where you feel comfortable and confident. The following steps can help you achieve this:
-
Get professional advice – you can take steps to improve your financial situation at any time in your life. A financial planner is like a coach who can guide you with advice that’s tailored to your goals and needs. If you’re experiencing financial stress, there are free financial counselling services available via the Moneysmart website.
The important thing is to take the first step to break the financial stress cycle. From there, you can get back on track to better financial and overall health and wellbeing.
Resources and Links
Financial wellbeing support
https://www.beyondblue.org.au/mental-health/financial-wellbeing
https://www.healthdirect.gov.au/financial-stress
https://www.sro.vic.gov.au/mental-health-and-financial-wellbeing-support