How our financial wellbeing affects our overall health

ARTICLE

02 September 2022

3 mins read

Whether you're aware of it or not, our financial wellbeing is a core component of our overall wellbeing. Let’s discover why.

Multiple studies have proved that there’s a distinct connection between our welfare and our financial wellbeing.

A 2015 Australian study discovered a link between financial hardship and the risk of mental health problems over time¹. Similarly, a 2017 study found the inability to meet mortgage or rent payments (I.e. a form of financial adversity) was one of the largest drivers of psychological distress².

But even knowing this correlation, financial wellbeing can be a tricky topic to dissect.

Financial wellbeing is subjective

Let’s get one thing straight: there’s no set definition for ‘financial wellbeing’. But if you really want to get into the nitty-gritty, two themes often recur when referencing studies on the topic.

Researchers tend to agree that financial wellbeing and/or financial satisfaction involves both objective and subjective financial influences³. This could mean either having enough money to comfortably pay off your mortgage or a loan, or having enough financial resources to pay for a lifestyle you enjoy.
Financial wellbeing reflects both financial experiences today (including your current situation) and your expectations about the future⁴.

Our financial wellbeing affects our physical health

Whichever way you slice it, our financial health is intrinsically linked with our physical health. In a 2020 global study, over 80 per cent of respondents said all other aspects of their lives were much more manageable when their finances were in order⁵. In that same study, 70 per cent of respondents also said positive financial wellbeing – which includes good financial habits – positively impacted their physical health overall.

With that in mind, it’d be fair to consider your financial wellbeing as a cornerstone in your life. And if it starts sliding downhill, this could impact other areas in your life – it’s in our best interest to establish healthy habits to benefit our overall wellbeing.

Our spending habits greatly impact on our financial satisfaction

How we utilise our money greatly affects how we feel about our financial situation – and therefore, satisfaction. This doesn’t just include general expenditure; it also includes incurring debt⁶ and the total wealth we accumulate⁷.

By improving our spending habits, we can reduce stress and anxiety while improving our financial wellbeing at the same time⁸. One way that can boost our financial security (and wellbeing as a result) is a solid saving strategy. Studies have proved this true, regardless of income levels⁹.

5 tips to improve your financial wellbeing

Here are five easy ways to give your financial health a boost – courtesy of an AIA financial planner.

Set a personal wellbeing goal. Ask yourself – what's something you'd like to do where money has held you back? E.g. joining a gym, doing an art class, going on a holiday. Research how much it would cost, and treat it like a mini savings goal.
Have a quick budget review – set aside one hour to review one month of your spending. Look at how much you’re earning and what you’re spending your money on. Group your spending into key categories like energy bills, insurance premiums, entertainment, groceries, and what’s left over.
Plan to reduce your highest interest incurring debt first – personal loans, credit cards and investment loans have the highest interest rates. Think about how you can reduce these debts and save on interest.
Trim your discretionary spend. Can you cancel a subscription, make lunch or coffee at home, or stop spontaneous online shopping?
Set aside small weekly amounts towards your personal financial goal.

If in doubt, speak to an expert

If you don’t regard yourself as financially satisfied, or if you’re struggling with other financial problems, consider seeking advice from a professional.

Take it from Christina Pascal, Financial Planner at AIA. “I can’t tell you how many times I’ve seen the impacts of financial wellbeing on my clients’ health,” she explains. “They’ll often come to me with a financial problem that makes them feel stressed and overwhelmed. I make sure to discuss a variety of financial options and find the one that works best for them. It takes a huge weight off their shoulders and helps them achieve what they really want in life.”

At AIA, we offer affordable, reliable and straightforward advice on a variety of topics, including insurance, superannuation and wealth. We consider your personal and financial wellbeing goals, to help you make confident financial decisions, big or small. Our financial planners recognise that everyone’s circumstances are unique and provide tailored advice that aims to educate and guide you towards a healthier, longer, better life.

Book a complimentary consultation with an aia financial planner

It’s never too late to take charge of your financial wellbeing, and it shouldn’t cost the earth. If you’ve ever wanted reliable financial advice from a professional, now’s your chance. Your first meeting with an AIA financial planner is free, no strings attached.

Don’t expect any jargon or convoluted advice – we provide detailed and personalised financial guidance however you want it. Whether it’s over the phone, video call or face-to-face, you can easily take the steps to improve your financial situation at any time in your life.

To book your free consultation, visit AIA's financial wellbeing website here for more information.

Footnotes

¹ https://pubmed.ncbi.nlm.nih.gov/25683473/
² https://www.researchgate.net/publication/317127812_The_Impacts_of_Household_Financial_Stress_Resilience_Social_Support_and_Other_Adversities_on_the_Psychological_Distress_of_Western_Sydney_Parents
³ https://link.springer.com/article/10.1023/B:JEEI.0000016722.37994.9f
⁴ https://deliverypdf.ssrn.com/delivery.php?ID=440117105065024122097115085122121122061052048060033049127111011125117111064016030074050061056028053034110065016011070113020121098041043075040104064108069095090074104081058082000065095029127116017115010126026125074007004000025117089101010093029094123007&EXT=pdf&INDEX=TRUE
⁵ https://apis.pe/insight/the-convergence-of-financial-and-physical-wellness-a-new-paradigm/
⁶ https://isiarticles.com/bundles/Article/pre/pdf/34037.pdf
⁷ https://docs.iza.org/dp1032.pdf
⁸ https://files.eric.ed.gov/fulltext/EJ1241095.pdf
₉ https://psycnet.apa.org/record/2016-17475-001

Staff Writer

Staff writers come from a range of backgrounds including health, wellbeing, music, tech, culture and the arts. They spend their time researching the latest data and trends in the health market to deliver up-to-date information, helping everyday Australians live healthier lives. This is general information only and is not intended as medical, health, nutritional or other advice. You should obtain professional advice from a medical or health practitioner in relation to your own personal circumstances. The information in this article is general information only and is not intended as medical, health, nutritional or other advice. You should obtain professional advice from a medical or health practitioner in relation to your own personal circumstances

Disclaimer:
This is general information only and is not intended as financial, medical, health, nutritional or other advice. You should obtain professional advice from a financial adviser, or medical or health practitioner in relation to your own personal circumstances.

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