The Keys To Financial Wellness For Financially Independent Women
Women have entered the Canadian workforce in significant numbers over the past decade. In fact, Canadian wealth is increasingly in the hands of women, and this trend is expected to continue over the next decade.
This new face of wealth brings about important implications for women, financial advisors, and the financial industry alike—women need to “re-think” what financial wellness means to them personally, and the financial industry will have to “re-think” how it addresses potential differing needs of women to ensure that there is a clear understanding of the needs, wants, challenges and opportunities faced by female investors.
As financially independent women create and manage more wealth, it is also important for them and their financial advisors to understand that financial independence is not the same as financial wellness. This article explains what financial wellness is and how you can improve your own or that of your female clients.
What Is Financial Wellness And Why Is It Important?
Financial wellness is not just about being financially independent—there are those who have achieved financial independence but have not gained their financial wellbeing. Yes, the amount of money you have plays a significant role in your ability to create a plan for financial wellness, but it is not the only factor—you should also consider how you manage the wealth that you have created.
You could be making $3 million dollars a year but still be financially stressed due to a proportionate increase in spending, not saving enough for long-term and legacy goals, or carrying excessive debt. On the other hand, you could be making $80K a year and be in a state of financial wellness because you understand how to manage your wealth. In both scenarios, you are financially independent, yet only in the second are you in a state of financial wellbeing.
Financial wellness, or financial wellbeing, can therefore be broadly defined as your ability to meet your financial needs, your sense of security about your financial future, and feeling good about your wealth through the freedom it gives you to enjoy life or even to give back your wealth to make a positive difference in others’ lives or the world.
Financial wellness is important because it is closely linked to mental health. Stress related to money can affect every aspect of your life. Achieving financial wellbeing can help lower that stress level. If you feel confident, secure, and content in the way you manage your money and plan for your financial future, you significantly reduce the time and energy your mind spends on thinking about money and have more time to enjoy life both in the present and the future.
Here are some indicators of financial wellness:
- Your income covers your expenses, and you are on top of debt repayments.
- You have set aside an emergency fund or have enough savings to for unexpected expenses.
- You understand your long-term financial goals and have a plan to achieve them.
- You are saving, investing, and working towards your long-term financial goals.
- You have freedom to make the choices that allow you to enjoy life or to give back to the community or the world in causes that you care about.
How You Can Improve Your Financial Wellness
If you are financially independent and would like to improve your financial wellness, here are two tips beyond general financial knowledge:
1. Have A Conversation; With Anyone You Trust, Really
Women are generally comfortable sharing details of their lives and feelings with others. Talking to someone you trust about the financial stresses in your life will help you process your thoughts and feelings—but may do no more than provide temporary relief. Long-term solutions will come from discussions with a trusted person about how you want to save more, invest more or make a difference with your wealth. This person could be a friend who has achieved financial wellness for themselves, a relative familiar with your financial situation, or a trusted professional advisor. Any such conversation can help you identify the sources of your financial stress, clarify your financial goals and point you towards solutions to help you achieve financial wellness.
2. Consult A Private Wealth Management Firm With Women In Senior Leadership
Women often have a different approach to wealth management and investing than men. Women usually prioritize achieving their specific financial goals, whilst men are often more focused on investment performance. As well, women’s financial wellbeing is often more family-driven (providing for children’s education or laying a foundation for future generations), or social-driven (supporting economic equality, healthcare, children/youth, diversity and inclusion, animal rights and/or other favored charitable causes).
Because of these differences, women can help women achieve financial wellbeing. Consulting a private wealth management firm that is gender inclusive and has women in senior leadership may provide you the care, insight and understanding you need on your journey to financial wellness.
Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.
Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.
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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.