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3 ways to become a Financial Wellbeing

Financial Wellbeing Coach

2023-12-01 00:00

Estimated reading time
8 min

In this article

  • Financial Wellbeing explained - what does it mean?
  • 3 different types of behaviours of a financial wellbeing
  • Make a plan for the future

Feeling financially secure isn’t just about how much money you have or how much money you earn. It’s about how you feel about your finances, how you manage your spending and saving, and your attitude towards money in general.

While many financial wellbeing factors are out of our control, new research shows there are a few things that can significantly improve our confidence and cashflow.

ANZ has been exploring the financial literacy, attitudes and behaviours of Australian adults for almost 20 years. More recently, we released the results of our 2021 Financial Wellbeing Survey, which captures the views of more than 3,500 Australian adults across different life stages and locations. We wanted to improve our understanding of why people might behave the way they do with their finances, and what factors are helping or hindering Australian financial wellbeing.

While the survey shows factors that remain out of our control – think socio-economic factors, pandemics, healthcare costs and so on – there are a few within our control that you can act on today.

Firstly, what exactly is ‘Financial Wellbeing’?

According to the report, “Financial wellbeing is the extent to which someone is able to meet all their current commitments and needs comfortably, and has the financial resilience to maintain this in the future.” In other words, it’s when you’re in a good place with your money.

In the survey, we measured financial wellbeing as a number out of 100, based on a range of factors. The Australian average was 64, with health, unemployment and earning potential the most significant aspects contributing to this number. But several factors within our everyday life can impact that final score too.

Behaviours that lead to better financial wellbeing

Our research showed that three different types of financial behaviours have a major impact on financial wellbeing and are key to ensuring we have the financial resilience to lessen the impact of those things out of our control:

  1. Saving and spending
  2. Investment
  3. Money management

Let’s take a look at each in more detail and how you can use them to improve your score:

1. Saving and spending

Those with higher levels of financial wellbeing in the survey were active savers, didn’t borrow money for everyday expenses and showed more spending restraint than people with lower levels of financial wellbeing. It also turns out that one of the strongest effects on saving and spending behaviours is your attitude to money. So, do you see yourself as more of a spender or a saver?

We also found that the better your “financial confidence and control”, the better your saving and spending. The fact that you’re reading this and starting to understand and improve your financial wellbeing is a good first step towards building that confidence and feeling in control.

So what should I do?  Set yourself a savings budget and look at where you’re splurging unnecessarily. A popular way to budget is by using ‘buckets’ or accounts to clearly define your income, expenses and savings. Your first ‘bucket’ is for your everyday expenses like petrol, coffee, entertainment and groceries. The second can be for large bills. Bills you can plan for like car registration, rent or mortgage, as well as utilities. Your third bucket can be for your savings and, depending on your savings goals, you may want more than one savings bucket. The ANZ Budget Planner can help you work these out.

2. Investment

Investment behaviours also have a role to play in driving financial wellbeing. These behaviours focus on longer term assets such as investing in property, using investment loans, having a managed fund or share portfolio and planning finances to make sure there’s money to use for investing.

How can investing improve my financial wellbeing?  Your ability to invest money in property or shares depends on how much extra cash you have. But if you do have funds in your account that you’re not sure what to do with it, investing them could be a good option. If you’re not ready to invest, you could start finding a little extra room in your savings strategy to put towards an investment amount. The sooner you start investing, the greater your potential for larger returns, as your money has longer to grow. 

3. Money management

Here we’re talking about behaviours such as planning and budgeting, and making informed financial decisions. People who plan and budget were more likely to have higher financial wellbeing, and people who were making informed financial decisions and product choices had higher scores too. 

The behavioural take-away? Better money management starts with making a plan. Use your monthly spending habits, as well as your monthly take-home pay, to set a budget you know you can stick to. If you don’t have one already, create an emergency fund that you can dip into when unforeseen circumstances strike. Even if your contributions are small, you’ll have something to fall back on and it could prevent you from having to borrow money at high-interest rates.

And finally…

Remember, while we can’t control everything that happens to us, having a future-orientated plan in place is key to developing financial wellbeing aboard life’s financial rollercoaster.

3 ways to become a Financial Wellbeing
Financial Wellbeing Coach

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The information set out above is general in nature and has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.