Forbes- November 3, 2021

The pandemic has inspired many of us to reassess our overall wellness and prioritize self care. But there’s a component of the wellness trifecta that is commonly overlooked: financial wellness. Financial wellness is the third piece in holistic health, with the first two being physical health and mental health.

So what exactly is financial wellness? And how do you know if you’re financially well?

Here are five key indicators that you’ve achieved a state of financial wellness.

1. You’re prepared for emergencies.

Nearly half of Americans wouldn’t be able to cover a $400 emergency . This lack of savings is a huge source of anxiety for many people. Whether it’s a medical emergency, unexpected expense, job loss, or property damage, things happen and it’s wise to be ready ahead of time.

Ideally, you’ll want an emergency fund that can cover at least six months of your living expenses. With this financial insurance in your savings account at all times, you won’t have to fear the possibility of being unprepared.

If you’re just starting to save money, don’t worry as much about the long-term goal of a six month emergency fund, but rather how you are going to get there. Start small by setting your first milestone, such as $500, and determine the amount of money you can contribute each month to get you to that mark. Once you’ve reached your first milestone, set your next and keep climbing until your goal is fully achieved.

2. Your spending habits support your values.

Every dollar you spend should get you closer to the person you want to be. To do this, you need a budget that is designed around your personal values and goals.

A spending analysis is a great first step that we take with our clients at OneEleven to help them learn their values. This includes reviewing everything you spend money on throughout the week and rating how happy each purchase makes you.The goal of this exercise is to identify the types of purchases that bring you joy and add to your life in a positive way.

You’ll also discover what is causing guilt, stress or negative feelings. Once you have this knowledge, it’s much easier to eliminate these types of purchases and focus on using your hard-earned dollars in an intentional way that makes you happy.

3. You feel in control and confident about your decisions.

When people say, “I’m not good with money” it usually just means they haven’t had the time or opportunity to develop their personal finance skills.

Successful money management is like riding a bike, playing the piano, or any other skill. The key to feeling confident is learning what you need to do and practicing deliberately until you get it right. When we feel inexperienced or like we don’t know the right way to do something, it’s impossible to feel like we’re in control.

The reality is that you’ll probably have to make money decisions nearly every day for the rest of your life. Investing in your financial education and taking the time to implement that knowledge today will save you a lot of stress and money for decades to come.

4. You are staying on track toward your future goals.

Identifying clear, concrete goals that inspire you is a critical step in your financial wellness journey. Write down what you want to achieve, when you’ll need the money, and how much you’ll need to fund each goal. Then save and invest towards those goals each month, and track your progress along the way.

You’ll know you’re on track when you get closer to achieving your most important goals every month. Other key indicators that you’re on track financially are that your annual savings rate and net worth are both increasing over time.

Investing also plays a major role when it comes to staying on track. While nearly half of Americans don’t invest in the stock market, investing is the only way most of us will be able to accumulate the more than $1 million we’ll need to retire comfortably.

5. You’re free of financial stress.

Money is the #1 cause of stress for most adults, but it doesn’t have to be. You can choose to master your money instead. You’ll know you’re financially well when you’re no longer stressed about money on a regular basis.

Financial stress stems from a lot of different things. Yours might be eliminated when you’re finally free of credit card debt, you have a safety net that ensures your loved ones will always be taken care of, or you’ve designed a financial plan that aligns with who you are and what you value. Imagine what it will feel like once this is achieved and let that motivate you towards reaching a state of financial wellness.

To become a holistically healthy person, your physical health, mental health, and financial health should all be in alignment. By creating a realistic spending plan, building healthy money habits, and investing in your future, you can break the regretful spending cycle, avoid debt, and increase your happiness by feeling confident with your financial situation.

By Dani Pascarella, Contributor

© 2020 Forbes Media LLC. All Rights Reserved

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