A simple and easy way to start cultivating financial wellbeing is with a self-assessment to determine your financial wellbeing score. 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). Given the current financial climate, now is the opportune time to undergo a financial health check. In the March 2023 quarter, all five Living Cost Indexes (LCIs) in Australia experienced rises, including Health, Housing, Food and non-alcoholic beverages, and Insurance and financial services. Medical and hospital services saw a 4.2% increase due to higher fees and private health insurance premiums. Electricity and gas prices rose by 14.3% due to higher wholesale prices, while food prices increased due to weather-related impacts and higher input costs. Put simply – it’s an expensive time to be alive, so let’s dive in and determine your financial wellbeing score.
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. ANZ defines strong financial wellbeing as ‘having enough money to meet your needs now and in the future.’
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
While 60% of employees are content with their current compensation, “financial pressure” was found to be the most stressful factor in a survey of 1,500 Australian workers commissioned by Flare. It is not shocking, given the state of the economy right now. In particular, housing costs are cited by 77% of workers as a source of moderate to high stress1. Now is as good a time as any to prioritise your financial health, as the rising cost of housing is unlikely to ease pressure anytime soon.
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.
RELATED: Tax savings – how can your car help?
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.
Information provided in this article is of a general nature only and we have not taken your personal financial objectives, situation or needs into account. We recommend you consider if you need to seek professional financial advice before making any financial decisions.
1 Flare National Employee Benefits Index, 2023.
