Surveys show that almost 90% of mid to large-size companies now offer financial wellness program for their employees. What does it mean? Does it guarantee that all of the employees are really well financially? In fact, wellness in financial aspect does not simply mean income, salary, credit score, or net worth. Instead, it involves finance-related stress, ownership of emergency fund, ownership of debt, ability to meet your financial goals in the future, and many more.
How to Measure Your Financial Wellness
Perhaps, you are not lucky enough to work for a company that offers comprehensive assessment on your financial wellness. However, you can do the assessment on your own way by answering the following questions:
Are you stressed financially?
Financial stress is related to how you deal with daily, weekly, or monthly expenditure. You are financially stressed when you are overwhelmed with debt, you wonder whether you can pay the monthly bill, or many more. In this case, you are not financially well. Finance-related stress can have adverse effects on your physical health and performance at workplace.
Do you have growing debt?
See the status of your debt. Is it growing every month? Ability to leave within your means is crucial for financial wellness. Otherwise, you will find more debt to deal with the routine expenditure. Debt is one of the most common causes of financial stress. Growing amount of debt means more difficulty to achieve your financial goals.
You can identify whether you have high-interest debts like credit cards, payday loans, and so on. Unless you can pay them on time, these debts can hurt your credit score seriously. On the other hand, you can save for future days if you live below your means. This way, you will be able to meet your financial goals in the future.
Do you have emergency saving?
Emergency saving is important to deal with unexpected expenditure. If you have adequate emergency fund, you can avoid the stress and additional debt. This also indicates that you are financially well. Imagine if you have to sell property just to pay emergency car repair. This will adversely affect your family finance.
Financial experts say that the ideal emergency saving equals to family spending for 3-6 months. The need for emergency saving is even more for people who have high-risk job. The saving may equal to family spending for 6-12 months. Therefore, you can begin by determining average monthly spending.
Can you achieve your future financial goal?
Of course, it is not easy to answer the question. The point is: nobody wants to fail. The problem is that many people are unable to plan well. They overestimate the income and underestimate the spending. As a result, they choose short-period financial goals, while they are not able to achieve them. The same case applies for long-term goal like retirement.
Therefore, make sure to calculate your income and spending carefully before setting future financial goals. However, if you find that you are on the track to achieve them, you can say that you are financially well. Assessing financial wellness in this way allows you to plan accordingly.