When we talk about wellness, most of us think about physical and mental health. But there is a crucial component that is often overlooked - that’s our financial health. Finances are inevitably bound up with our emotions, which is why it’s no surprise that more than 2 in 5 women (46%) say money issues have prompted feelings of anxiety, depression, sleeplessness and stress. It also isn’t surprising to unearth that women’s financial health is statistically lower than men’s. In fact, financial health amongst women is the lowest it’s been in five years.
That’s why building women’s financial wellbeing up is more important than ever. Those with their financial wellbeing in check are, (unsurprisingly), less stressed about money. And this has transformative ripple effects over their mental and physical health, and by extension, their relationships.
So let’s dive into why women fall short on financial wellbeing and what you can do to improve your own financial health.
What is financial health?
Money can be a sensitive topic, but ignoring your financial health could prove to be an even bigger pain both for your wallet and your mind. Put it this way: your financial wellbeing is a reflection of how you manage your income, debts, and savings.
But economic factors like inflation can also impact your financial health (yep, that’s where the financial gender gap we’re so tirelessly fighting fits in). But here comes the double whammy: women have not only had to deal with the gender pay gap but have also reported feeling less secure about their financial situation than men.
The gender gap in financial health
With women’s financial health at a five-year low, women are feeling the brunt of it more than ever. Inflation fears, the cost-of-living, recessions…and let's not forget about all the other concerns we have to juggle, like reproductive rights and access to childcare.
According to the research, 59% of women worry about their finances at least once a week, and 43% of women actively worry about money at least once a day. News flash: these numbers were staggeringly higher than what men reported on both a daily and weekly basis.
Sure, men face similar issues and can outworry women at times. But when women have a gender pay gap to contend with, carry a disproportionate amount of student loan debt, and have to smash through the ever-elusive glass ceiling just to get on an even playing field, it’s no surprise women’s financial health has plummeted to the ground.
Financial health is financial wealth.
8 steps to improve your financial health
So what can you do to pick their financial wellbeing up off from the ground? Here are 8 steps to get you in financial shape.
1. Saving is key
Stashing money into a bank account, and having a financial cushion to fall back on, is crucial for your financial wellbeing. It not only allows you to spring into action when unexpected circumstances arise (like when the washing machine breaks down or you have to fork out on medical bills), but also provides solace knowing that you have the funds available for your future plans and goals.
Saving money can feel like an uphill battle, especially when macroeconomic forces like inflation make it seem like the cost of everything is skyrocketing. But these sorts of challenges make having a financial back-up even more important if you want to prevent your financial wellbeing from taking a brutal knock.
2. Change daily habits
Believe it or not, it's the small habits you implement into your daily routine that can lead to big savings and a significant improvement in your financial health and wellbeing. For starters, consider setting aside a designated amount for leisure activities, to prevent you from overspending when the weekend hits. It’s also worth identifying your cash inflows and outflows through budgeting (we advocate for the 50/30/20 rule), and building a budget you can actually stick to. This will help you track your spending and perhaps even discover areas where you can make cuts.
You can also consider cancelling any unnecessary subscriptions. Do you really need fifteen different streaming services? Lastly, make a list before you venture out for grocery shopping to prevent unnecessary purchases. You'll be surprised just how much you can save by sticking to a list…
3. Save an emergency fund
Picture this: You're walking on a tightrope, trying to maintain your balance, when suddenly you feel a gust of wind pushing you off course. Which is why you need a safety net – a cushion to fall back on. This is when your emergency F*** You Fund becomes essential.
A F*** You Fund is a pot of money that you create for yourself and build up over time in order to have enough money available to help pay bills or cover other needs if you need to leave a job, take a break from work, or be financially independent. It is a critical part of financial security and stability, and can provide much-needed peace of mind in times of uncertainty or hardship. And the good news is, you can get started today.
4. Decrease or pay off debt
It's no secret that debt can be a real drain on our happiness and peace of mind. The first and most important step towards reducing your debt is to stop taking on more financial commitments. Yes, this means resisting the temptation to whip out that credit card or take out yet another loan.
Once you've got that under control, it's time to get strategic. Plan your debt payments based on your individual capacity. Then figure out whether you want to adopt the snowball or avalanche method to paying off debt. Maybe start with smaller amounts or focus on those pesky debts with the highest interest rates.
5. Earn extra income
Who said improving your financial health has to mean living on a shoestring budget? The truth is, there are plenty of ways to bring in extra cash and keep your wellbeing in check. Enter collaborative economy platforms – the apps that let you sell your gently-used clothing, unused appliances, and other items that are just gathering dust.
6. Invest your money
Investing can be a powerful tool to improve your financial health and wellbeing. It's not just about sitting in front of a computer screen and watching numbers fluctuate, but rather it's about taking charge of your money and allowing it to work for you. Whether it's investing in shares, funds, or bonds, there are numerous ways to generate additional income and build up wealth through investing.
6. Plan before you spend
Improving your financial health also isn't just about cutting costs, making money and saving it. It's also about having the right mindset and planning effectively. Think of it as a workout for your wellbeing - in order to see results, you need to set achievable goals and make a plan to reach them.
Start with SMART goals (Specific, Measurable, Actionable, Relevant and Time-bound). Figure out what you want to achieve, break them down into small digestible chunks. A good example of a SMART goal is, for example, the goal to save $1,000 over three months. Whatever your goals are, take a step back, review them regularly, figure out a plan to achieve them and make the correct adjustments wherever needed.
4. Talk about money
Talking about money can be triggering. That's because money is inherently tied up with our emotions. Which is why many of us ignore talking about money, because of the feelings of shame, guilt and embarrassment when talking about our income, net worth, debt and other issues surrounding our finances. In fact, one study conducted by Merrill Lynch, 61% of women said they would rather discuss the details of their own death than money.
If you want to improve your financial wellbeing, start bringing the topic of money to your daily conversations with loved ones. Not only does it help to realise you’re not alone in your fears and worries, but tearing down the communication barrier can empower you, and women for generations to come, to feel comfortable pursuing financial success and taking an active role in their finances.
So how can you start combatting the taboo starting today?
1. Start talking about money with your significant others, close friends and family
2. Be prepared to be a little vulnerable with the people you trust
3. Keep the conversation non-judgmental
And remember, if you have a question or concern about money, people in your life probably do, too. They will benefit from conversation as much as you will.
Improve your financial health today
Money doesn't grow on trees, but financial health and wellbeing can certainly flourish with an extra dose of effort. Educating yourself and gaining control over your finances might seem intimidating, but it's one of the most accessible things you can do to improve your situation. Here are three things you can do to improve your financial health today:
- Join the Female Invest community: With a membership to Female Invest, you get full access to an unrivalled universe packed with courses, webinars, articles, worksheets and more.
- Start engaging with your finances: Whether that’s creating a budgeting spreadsheet, starting to pay off debt, or making moves towards your first investment, you can build a concrete financial plan to help you reach your goals.
- Learn the different tools to grow your wealth: Whether that’s learning about investing or diving into the world cryptocurrency, there are different ways to grow your wealth through stocks, funds, ETFs and more.