What Are The Three States of Financial Well-being?

         It is a process to improve your financial wellbeing and takes time and effort to get to the place where you are at ease with your money— where you feel secure in your future and happy with yourself and your financial situation. At times, before you get there, you can find yourself in a place of overwhelm. You may feel like you have failed and those voices in your head, the ones that can be your biggest cheerleader or your worst critic, maybe beating you up. Step back. Slow down. Regroup. Be clear that taking responsibility for your financial well-being will require you to examine where you are, as well as decide where you want to go. Begin by deciding where you are now. Are you in a state of dysfunctional, functional, or flourishing financial wellbeing? Let’s explore these three stages so you can identify your starting point. Once you know where you are, then you can start to create a path to where you want to be.

Your Body Can Tell You About Your Financial Wellbeing

       You can easily identify if you are in a state of dysfunctional wellbeing with what I refer to as a gut check. Your body has a lot of wisdom and physically indicates when things are not right. Your mind, however, can play tricks on you and cover things up, just like when it lets that voice tell you terrible things that aren’t true, and your mind can hide things from you too. Your body will tell it like it is, it cannot lie. So, what is your gut telling you? When you think about your money situation, does your gut feel soft and without tension, or is it bloated and tight, with knots in your stomach? If it is tightness and knots your body wisdom is telling you, you are in a state of dysfunctional financial wellbeing.

       If you are not convinced your gut knows, there are other ways to determine if you are in a dysfunctional stage with your financial wellbeing. A research team led by Dr. Bradley Klontz, professor of financial psychology at Creighton University, found eight problematic money behaviors such as excessive spending, compulsive gambling, and financial denial to name a few. These behaviors then create negative financial health indicators, such as a lower net worth, less income, and more revolving credit. If you can relate to these difficult situations, you can determine if you fall into dysfunctional financial well-being. While this is not where you want to be, with work and planning, you can move out of this dysfunctional state.

Determining if You are in a State of Functional Financial Wellbeing

       Functional financial wellbeing could be considered a state of comfort. You are in a place of comfortably paying your bills, you are timely in your payments and not worried about where the money is coming from to make them. You are conscious of areas of your finances that could use some attention; however, you are not sure what the next steps might be or if the results are worth figuring it all out. There may be some level of stress about if your larger or longer-term plans will be realized. The conversations between you and your partner can go well, but they also can lead to tension or even resentment, when your goals are not aligned. This is not a bad place. You are comfortable and yet, you know, if you are willing to put in that effort, and figure out what it will take, you could reach that long term goal. Buy that lake house or take the European vacation.   

Reaching a Level of Flourishing Financial Wellbeing

        When you are in a flourishing state of financial wellbeing, you are calm. Things are easy. You have the freedom to make choices that fulfill your goals and dreams. You are in alignment with your partner and family, so decisions are easy. You, together, have intentionally made the choice to work towards and attain this level of financial wellbeing. 

        It is important to be aware though that this level of affluence sometimes comes at a cost. While you may have the things and experiences you desire, you need to make sure it does not come at the expense of the relationships with those who matter to you. As an example, a parent who works many hours to have the “things” and misses attending the activities their kids participate in.

Improving Your Financial Wellbeing

        Now that we have looked at the three states, was it easy to identify which state of financial well-being you fall in? If you are honest with yourself, it was probably pretty clear. So, what do you do with that information? In each state, dysfunctional, functional, or flourishing, there is room to improve, to tweak things, to get clear on your goals and work towards them. The great thing is you don’t have to figure it out alone. There are resources, including financial planners, counselors, attorneys, and Financial Therapists, such as myself. We are all here to assist you on your path to financial well-being.

Would you like more 1 on 1 support? Then perhaps Therapy Informed Financial Planning is for the two of you. I invite you to schedule your free 30-minute discovery call today.

Wishing You Healthy Love and Money,

Ed Coambs

MBA, MA, MS, CFP®, CFT-I™, LMFT

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