What Does Financial Wellness Look Like?

by Rick Kahler

Do you know what financial wellness looks like? Here’s how to spot the difference between financial wellness and personal finance disease.

A lot is written on the symptoms and consequences of poor financial health. These days, we are surrounded by news stories of financial disease in individuals, corporations, and nations. Financial instability seems to be the new normal.

The signs of personal financial disease are easy to spot: spending more than you make, not having one year of living expenses saved, not funding your retirement plan, no (or negative) net worth, a history of poor money decisions, and chronic emotional distress around money.

What we don’t hear much about are examples of financial wellness. I’ve asked a number of people what financial wellness looks like. I’ve received a wide array of answers, but the most common goes something like, “I’m not sure I can define it, but I know it when I see it!”

I know a number of individuals meeting that definition who are as far from financial wellness as South Dakota is from China. Having a clear understanding that “Oh, I’m so deep in debt I’ll never be able to get out” is not exactly financial wellness.

Other definitions of financial wellness include:

• Not having to worry about finances
• Having a written financial plan
• Having finances in place to achieve financial goals while adhering to basic principles of financial planning
• When you’re not stressed about money
• Living within your means and having debts and obligations that you can meet
• No longer having to worry about retirement
• To be in such a financial situation that hopes, dreams and future endeavors are realistically possible and attainable
• Having the ability to live within your financial means.

If I could boil all these definitions down, I might conclude that financial wellness is having adequate cash flow to live my desired lifestyle for the rest of my life without anxiety or fear. This, to me, defines financial independence rather than financial wellness.

Financial wellness certainly includes financial independence, but it is more than that. Financial wellness needs to include what a person thinks, feels, and believes about money. I know many people who are financially independent that I would not describe as having financial wellness. Some of them have almost debilitating guilt around having enough, live in fear that their money will run out, have such poor physical health that they can’t use their money to do the things they love to do or lie awake nights worrying about what legacy they should leave to their children and grandchildren.

Financial wellness, then, is a balanced integration of financial, emotional, and physical health. It comprises having adequate cash flow, sufficient assets, the absence of illness, and the presence of emotional well-being. It is the sum of everything that goes with being financially, emotionally, and physically sound.

• How Financial Wellness Differs From Wealth
• Prescriptions for 5 Common Financial Ailments
• Are You in Need of Financial Bypass Surgery?

Reviewed October 2023

About the Author

Rick Kahler, MSFP, ChFC, CFP, is a fee-only financial planner and author. Find more information at KahlerFinancial.com. Contact him at Rick@KahlerFinancial.com or 343-1400, ext. 111.