Guide to financial wellness

Photo of a family eating brunch

Over the past couple of years, personal wellness has been talked about more and more. You may have heard your favorite influencers, celebrities, or athletes talk about it. Some might have a skincare routine, practice meditation, or exercise every day. These are all types of wellness practices that lead to your overall wellness. But what is wellness?  

At its core, it’s an ongoing commitment to a better quality of life. It’s the practice of treating your body and mind with care.  

And it’s for everyone! But just like there are ways to physically and mentally improve your wellness, there are financial ways too.  

However, we don’t think people talk about your financial wellness enough. M1 has set out to change that. This is our guide to financial wellness. It has effective and actionable ways to help you maintain a healthy financial life.  

Because financial wellness is tied to overall wellness, and you deserve that. In this guide we’ll cover the following topics:  


What is financial wellness? 

Financial wellness refers to your overall financial health.  


It includes things like habits, planning, mindset, and goals. The idea is that you have control over your finances, you know what you’re doing and where you’re going, and you’re practicing great money habits.  


Remember that this is a journey and something that must be regularly maintained.  


Your mindset  

It all starts with your mindset—how you think about money matters. Every day, you have the power to make decisions that can move you forward financially. Your perception of money management and financial well-being impacts how you spend, save, invest, both in your day-to-day and for your future.   


What is your mindset and where does it come from?  

Your mindset is your unique set of beliefs and attitudes about money  
developed through learned experiences and your environment. It probably started to develop with how your parents (or other adults in your life) approached money.   

Each one of us experienced various levels of financial conversations and financial wellness as children. For example, some of us may have been exposed to concepts like budgeting and investing early on. Others may have grown up in a household where money was a taboo subject and not discussed.  

Your history with money is essential because it gives you a baseline on your mindset, which impacts your financial decisions. Once you understand your biases, you can decide which parts of this mindset to keep and which parts to develop.   

The best part about your mindset is that it can evolve over time.  


Developing your mindset  

We built M1 with a healthy mindset at the core of our values and product beliefs. When it comes to your finances, we believe having a long-term, engaged, growth mindset is the smart way to build sustainable wealth and improve your financial well-being.   

However, money is emotional and comes with plenty of ups and downs. Over time, you’ll face financial success and financial challenges which can impact other areas of your life—often testing your mindset and decision making. Throughout your life, you may feel negative and positive emotions towards money, even with the right mindset:  

Negative:

Positive:

  • Anxiety and stress 
  • Lack of control 
  • Negativity about the future 
  • Procrastination  
  • Sleeplessness  
  • Feeling confident about your decision-making
  • Being in control of your finances
  • A general optimism and willingness to learn in the face of uncertainty
  • An action-oriented approach
  • Flexibility

The key is that the right mindset will help you quickly reframe and navigate away from the negative emotions, focusing on the positive. This will help you make decisions with a clearer, more objective perspective.   
Here are seven ways you can build a healthy financial mindset:  

  1. Identify and work through your relationship with money. Consider your preconceived notions, past experiences, and learned financial behaviors. Check your financial biases.  
  2. Build a plan, write it out, and stick to it. Write down your financial goals, ideas, projects, questions, and concerns. This can help hold you accountable.  
  3. Prioritize your goals, needs, wants, and to-dos. If everything is a priority, nothing is a priority—and it’ll be too overwhelming to complete.  
  4. Get excited: you have full ownership over your life. Focus on the things you can control.  
  5. Consider the end goal (like a dream home) your motivator. Money is great, but it’s a means to an end. Money as your only motivator may not be sustainable.   
  6. Lean into habits. More on this later, but one small step each day is better than one giant step each year. Make your habits easy, rewarding, and connected.  
  7. Stay in touch with your emotions. Know how you’re feeling about your finances and how it’s impacting your decision-making. Reframe the negatives into positives when possible. 

The decisions you make about your finances impact every aspect of your life and your overall well-being. When you build a healthy mindset about your finances, you set yourself up for smarter choices and the life you want to live.   


Your habits

Your mindset’s related to your habits. You’ve heard the sayings “you are what you eat” and “you are who you surround yourself with.” The same principles apply here. Your mindset guides you in building healthy habits or unhealthy habits, both as they relate to your finances and other aspects of your life. And whether you know it or not, your habits define you.  

That’s why it’s critical to your financial and overall well-being to regularly revisit your habits. You want to make sure you’re practicing and building the habits that contribute to your goals, values, and ideals.   


Building healthy habits  

After all, we are creatures of habits. We may have bad habits we’re trying to change or habits we’re trying to create.   

Need help establishing better habits? The New York Times lays out great steps for building healthy habits. These steps include making the habits easy to do, sticking to them each day, and rewarding yourself for keeping the habits. The advice they layout is general but can certainly be applied to your finances.  


Financial habits  

The most important rule of saving and investing is simple: pay yourself first.   

Automation and investing strategies like dollar-cost averaging are great ways to maintain healthy financial habits.  

No matter your skill level, automated investing tools can help you on your journey to better investing. They save time, improve your investing focus, and build the habit for you.  

Depending on your platform of choice, you can take advantage of features like recurring transfers or automatic investments.  

At M1, we take automation seriously with dynamic rebalancing, auto-invest, recurring transfers, and Smart Transfers.  

That last one is built like a habit: you set the triggers (like maintaining a certain amount in your M1 Spend account). Smart Transfers automatically executes your desired action (like sweeping the extra money to your M1 Invest account).  


Your financial team  

Financial wellness shouldn’t be a lonesome mission. Surrounding yourself with people who also care about their financial well-being benefits, everyone.  

And talking about money is no longer taboo.  

Host check-ins with your spouse or partner to discuss family finances. Talk with friends or coworkers about overall financial plans, retirement accounts, and any concerns or opinions you may have.  

Creating a financial book club with close ones is a great way to achieve financial well-being.  

Also, consider professionals such as accountants or advisors who can lend experience and expertise in the discussion.  

And finally, the internet! Consider checking out social media sites or investing sites to join in on the conversation surrounding financial wellness.  

And here at M1, we’re always preaching a financially healthy lifestyle with posts on our blog and market news from our in-app research tab.  

Knowing your financial team and being comfortable discussing the complex subject of money is a skill everyone should master on their way towards financial wellness.  


Your plan  

Your plan is the strategy you follow to help get you and your money to where you want to go. It’s important because it allows you to make the most of your assets and helps ensure you meet your future goals.  


Your values  

And within your plan come your values which influence where your money goes. Whether you’re aware of it or not, your values tend to determine where you spend or invest. These values can be anything from supporting takeout business (which we can all get behind) to specific causes such as socially responsible investing.

Identifying your core values allows you to spend or invest with intention, plus it feels good!  


Review your financial plan  

Your plan starts with understanding where you’re at now, financially and emotionally in terms of how you feel about your finances. Your financial plan should not be treated as a static document. Instead, your financial plan is a living, breathing record that you should review and revise in response to changes in your life. Financial planning is an ongoing process that should continue throughout your life.   

As a rule of thumb, you should review your plan annually and make changes where they are needed. For example, the tax laws frequently change, making it important for you to update your tax planning strategies in your plan in response to changes.   

You should also review your financial plan after any significant change in your life, such as getting married, getting divorced, having a new baby, experiencing a death in the family, and other changes. Each of these situations could mean adjusting your plans, changing your designated beneficiaries, and making other modifications so that your plan continues to work for you.  


Your goals  

After you’ve reviewed your financial plan, it’s time to think about your future. Consider what you want out of it and what needs to happen financially to get you there. Your financial goals are where you would like to be financially in the short-term, mid-term, and long-term. If you do not have financial goals that you are working towards, you will be likelier to spend more than you should. Financial goals are the key to working toward financial security and independence.  

If you are wondering how to set financial goals, you should begin by understanding your current finances. You need to understand the value of your assets and your liabilities. You should also determine how much you are spending to have a better idea of what you need to work towards to achieve.  

Once you set your goals, you need to work on them continually. Your financial planning should not be a one-time task. Instead, you should conduct financial planning and a review of your goals at least annually so that you can make adjustments as needed.  


Your budget  

Next, set a budget that considers where you’re at, where you’re going, and how you’re feeling. A budget is like boundaries for your future and your wealth. A well-thought-out personal budget should never feel limiting. A budget that fits your lifestyle and money habits should empower you to reach your financial goals, motivate you to make the most of your money, and give you peace of mind knowing that you’ve covered all your bases. After all, it’s tough to work toward any financial goal without charting where your money should be going in the first place.  

So, it’s a bit disconcerting that 59% of Americans don’t currently use a budget — a stat that also doesn’t make it particularly surprising that a similar portion of the population (about 66%) would struggle to scrape together $1,000 in an emergency.  

To stay on track with your monetary goals and make sure your bases are covered, you’ll need to choose a personal budgeting strategy that fits your unique needs and financial personality.  


Why is financial wellness important?  

Overall wellness is important. It’s why we exercise, eat right, meditate, read, and socialize. When one part of your wellness is off, you feel off. We believe financial wellness to be part of your overall wellness. Think of financial wellness as the engine that can power all other areas of wellness.  


Ties to building wealth  

Financial wellness is closely tied to building wealth because the habits you set while maintaining your well-being align with your habits when building wealth.  

Building wealth over your lifetime is important, whether to meet an emergency, pay off your debt, purchase something you love, or make a more significant impact on your society. This involves acquiring a few critical financial habits, and becoming wealthy can bring you many benefits, the main one being the financial freedom to do what you want at the time you want.  


Ties to overall well-being  

Financial well-being is fundamental to overall well-being.  There’s a misconception in the financial world that money matters. It doesn’t. Money is solely a means to an end. It’s about providing comfort, safety, and happiness – your well-being.  

We picture financial well-being through a model like Maslow’s Hierarchy of Needs, a theory in psychology about well-being. The theory says needs lower down in the hierarchy must be satisfied before addressing anything higher up.    

This is the pyramid we keep in mind at M1:  

At the most basic level, you exchange your time, skills, experience, energy, and creativity for money and benefits (and hopefully, personal fulfillment). This is the contract you enter with your employer or clients. Then, you use that money to fill your needs in order.   


Financial survival   

Financial survival is your bare minimum. It’s the money you need to cover your basic living expenses. It’s the ability to provide yourself with food, shelter, and clothing.   

Financial security    

Financial security means you’re no longer worried about covering your basic living expenses. You have money saved for emergencies and future financial goals. And, you’re able to support a family if you’d like.   

Financial flexibility   

Financial flexibility means you can do more with your money at the moment. Whether it’s shopping, travel, or entertainment, you have extra to enjoy even after saving for your future.    

Financial freedom    

Financial freedom is your highest financial potential. It means you have enough savings, investments, and cash to live the life you want. It also means those resources are enough to do what you want with your family, career, and future.   

Your finances touch every aspect of your life. They influence your experiences, your relationships, your future.   

Improving your finances means improving your life.    


Choose the right tools   

Just as you would select healthier foods, choose the right gym, or find a great therapist, you need the right tools to help you on your way to well-being. For financial wellness, those tools are readily accessible.

M1 is built with your long-term wellness in mind. It’s why we offer flexible, customized, and automated tools to match your financial lifestyle.  

Whether this was an introduction or a refresher, we’re happy you’re joining us on the journey of financial well-being.  



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