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Financial Wellbeing Versus Financial Wellness and What Impacts Your Life

Financial Wellbeing Versus Financial Wellness Hero image
 Affinity FCU Blog
By: Grant Gallagher
AVP Financial Wellbeing & Brand Communications

March 29, 2024

When managing your personal finances, it’s important to understand how it affects financial wellbeing and financial wellness, two terms that are often grouped together. These concepts have notable differences, and it's important to know how they affect your life overall, especially now, as consumers continue to face high prices and interest rates. A 2023 survey from Bankrate showed 50 percent of U.S. adults believe their financial situation is worse than 2020. Given this, it’s worthwhile to become familiar with practices that can help you manage your finances and feel a sense of confidence in your financial situation.

Financial wellbeing and financial wellness, while related, are not one in the same. Financial wellness involves learning about how to manage and utilize financial products and resources. It's about making educated and effective decisions with those resources, such as brushing up on improving your credit, knowing the benefits of using a credit card over a debit card (and vice-versa) for certain purchases, or utilizing our certified wellbeing coaches 2 to help guide you when you’re facing a big financial decision you don’t feel comfortable making alone. On the other hand, financial wellbeing deals more with emotion. It’s the subjective feeling of financial security; how confident you are about your finances and ability to enjoy life, like going on a nice vacation or reaching personal goals without worrying about every penny. Your personal relationship with money is linked to your overall sense of wellbeing, finance just being one element of it. Your budget, spending habits, and financial goals are part of the financial wellbeing equation.

So much financial advice is available today, which can be overwhelming. If you’re uncertain about who to speak with and where to start, check with your trusted financial institution. A financial professional can help you sort out the various aspects of your finances that should be prioritized. Conversely, achieving financial wellness and wellbeing can be manageable tasks. It begins with setting clear short- and long-term financial goals, and knowing where to go for the answers to your questions on your financial journey. Knowing what you're working towards, and how to get there, helps you make the right decisions with your money. This could range from saving for a week-long trip to your favorite shore location to planning for retirement. With these goals in mind, you can start to build a path to get there.

Budgeting is crucial for achieving financial wellbeing and wellness. It’s not just about tracking every penny spent but understanding your spending habits, being intentional about your monthly expenses, and ensuring you’re living within your means. By tracking your income and expenses, you can identify areas where you can cut back and find opportunities to save more. This also includes prioritizing an emergency fund. While it can be challenging to dedicate extra savings given the current economy, life is full of unexpected twists and turns. Having a financial cushion can prevent these surprises from derailing your financial wellbeing and adding stress to your life.

Credit and managing debt are also crucial components. Good credit can open doors to important life milestones like buying a new car or house. Learning about credit scores 3, how they’re calculated, and how to improve them can significantly impact your financial wellbeing and wellness. Similarly, tackling debt – from credit cards, student loans, or other sources – is vital. It’s about finding a balance that allows you to pay down what you owe while still working towards your financial goals.

By focusing on these areas, you can build a foundation of financial wellbeing and wellness to reach your goals and have a sense of security and confidence in your finances. For more guidance and resources on improving your financial wellbeing, visit our website 4 and explore our educational tools designed to help you find that balance and peace of mind.

This information is for informational purposes only, is intended to provide general guidance, and does not constitute legal, tax, or financial advice. Each person's circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition.