What is financial wellness?

Financial wellness is something that’s easier to explain than it is to define. It’s a bit like asking what does ‘peace of mind’ mean to you? The reality is that it means different things to different people. It also depends on where you are in your life - with your age, your circumstances, where you are in your career and so on all influencing and contributing to your financial wellness. It’s not just about money.

To make it easier to understand, we’ve broken financial wellness down into four core areas - budgeting, debt, savings and protection. The trick is to be mindful of each of them. And if you can, you’ll be better equipped to keep your financial health on track.

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Budgeting - take control of your day-to-day.

Creating a budget helps you take control of your day-to-day finances and understand what’s coming in, what’s going out and where it's going – so you can prioritise spending and saving.

If you make a plan and stick to it, it can help you to make your money last and potentially save each month for your future retirement. A great way to start is to detail your spending and income by taking a good long look at your bank statements.

Debt - manage your borrowing.

Debt can be positive and useful when it’s necessary. And if managed carefully, making sure you don't become over-burdened (and that you make all of your monthly repayments), it can be affordable.

Common types of debt are a mortgage, a car loan or using credit cards for larger items or for regular purchases to gain rewards.

Even if you have your debts under control, it's vital to understand what you owe and how much it's costing you. This will help you make sure your borrowing remains affordable and enable you to identify where you may be able to make savings. All of which can help you feel more in control of your money and help you build your credit profile.

Savings - move towards your goals.

At its heart, saving provides financial security, freedom, and protection against money emergencies – save today for a better tomorrow. And having savings can help you to improve your financial wellness and reduce stress in your life.

Establishing and working towards your savings goals can help you feel better prepared for those important moments in life, such as buying a house, helping family members, or affording the retirement you want.

Protection - be prepared and safeguard what matters.

We all have plans, but financial wellness means being as prepared as possible for the unexpected. From your boiler breaking down to a job loss, or the death of a loved one.

Whether you’re facing a temporary or permanent financial loss, it helps to have some emergency savings and protection in place. The good thing is there are small steps you can take today to help you feel more protected against things we might not be able to control. 

The art of setting small goals

If the idea of tackling your financial wellness feels overwhelming, start with little steps. Set small goals and bit by bit you’ll get financially fitter. And before you know if, you’ll be feeling better than ever about your financial health.

Check your financial wellness

If you’d like to take the temperature of your financial wellness to see what you’re good at and what you could improve, do take our financial wellness test.

Take a financial wellness test now

Important information -  investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.