A simple and easy way to start cultivating financial wellbeing is with a financial self-assessment. Not only is this a super way to review your finances, it’s also an opportunity to take stock of your financial situation and make positive changes, if needed.
Before diving into self-checking your financial wellbeing, you first need to understand what having a good level of financial wellness actually means.
What is financial wellbeing?
While there’s no strict definition, the term ‘financial wellbeing’ is often used to describe a state that includes being able to meet your financial obligations, having enough financial freedom to enjoy life, being in control of your money, and having solid financial security.
When looking for signs of financial wellbeing in your day-to-day life, it’s often a good thing if you can stay on top of your bills and debt, have enough money put aside for emergencies, and keep extra cash on hand so you can plan for important future expenses, like a house deposit or education expenses.
The state of financial wellbeing in Australia
It’s a mixed picture when it comes to how Australians are doing on financial wellbeing. According to recent industry research, 25 per cent of Aussies don’t enjoy life due to the way they’re managing their money, while 37 per cent couldn’t handle a big unexpected expense.
On the flipside, one in three Australians say they have a high level of financial wellbeing, with the highest degree of satisfaction being among those aged over 65.Why should I conduct a self-assessment?
Knowing your level of financial wellbeing enables you to better understand your saving and spending behaviours, giving you a money snapshot that can be used to make adjustments.
What’s more, in addition to small tweaks to spending and saving, assessing where you’re at in terms of financial wellbeing on a regular basis can help you break bad money habits and assist you to reach your financial goals faster.
What questions should I ask?
When it comes to assessing where you sit in terms of financial wellbeing, one common method is to ask yourself a set of questions, and then give yourself a rating on each.
One of the most well regarded, and quickest to use, Aussie financial wellbeing surveys asks respondents to answer from 4 (completely) to 0 (not at all) on the following five questions. See how you go on the following:
Once you’ve determined your score for each, multiply the total by five, and this will give you your overall financial wellbeing score. A score of 0 to 22.5 means you’re “having trouble” on financial wellbeing, 25 to 47.5 means you’re “just coping”, 50 to 75 means you’re “getting by”, while 77.5 to 100 indicates you’re “going great”, and is the top category.
Thankfully, if you didn’t score as high as you’d like, or just want more financial peace of mind, financial wellbeing can move up or down depending on the decisions you make.
Whatever the result, you can feel positive that a financial self-assessment is the first step to better financial wellbeing and getting your personal finances headed in the right direction.