What Is Financial Well Being?

It’s funny how everyone in the world dreams of living the good life — you know, driving fast cars, living in luxurious homes and waking up to a million dollars in our bank account.  However, few of us have the financial education needed to obtain said good life.

With so much emphasis on the benefits of having financial freedom, how come there isn’t much information on how exactly to obtain it? Fortunately for you, I’ll tell you how to live the good life. Obtaining the good life starts with an understanding of financial well being. So without further adieu, I present to you an article that covers the basics of financial well being.

So What Exactly is Financial Well Being?

The Consumer Financial Protection Bureau (CFPB) defines financial well being as “a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.” Essentially, financial well being can be boiled down to this: financial well-being is having enough money to cover your expenses for the present and the future all the while enjoying life. Ok, not the revolutionary of a concept but important to know. So how did the CFPB come up with this concept anyways?

As it turns out, financial well being can be determined by looking at four main concepts. As I go over these concepts, write down your responses honestly on how your current financial situation measures up to the definition of financial well being. It’s only when you’re honest with yourself that you’ll be able seek financial help in the future. Please know that the best person to speak about financial advice is with your financial advisor, as they tend to provide an educated, unbiased perspective.

Ok, here we go:

Present Financial Security

This means how you are doing right now financially. Are you able to cover all of your bills? Do you feel in control of your present financial situation? Are you able to make ends meet?

Outlook for Future Financial Security

This means how do you feel about the future of your finances. Can you withstand a financial calamity? If you lost your job, would you be okay or would you suffer?

Present Financial Freedom of Choice

Are you able to pay for your wants? Or can you only afford your absolute needs?

Future Financial Freedom of Choice

Are you on track to meet your long-term financial goals? Does the current lifestyle you live help you achieve your goals?

It’s only after you have taken the time to examine all of the criteria that you can begin to determine your state of financial well being. When you know your current financial state, you can then begin to force yourself to improve your present situation so you can build successful habits that will help you meet your goals.

The best advice on how to obtain the good life is to first examine your present financial situation, and then identify where you are doing well and where you need to improve.  Finally, begin to make a plan of action that aligns with your future financial goals!

Financial freedom is for the doers of the world. So get educated, be a doer and live the good life.