ELLEVEST INSIGHTS

Real wellness isn’t just a brand slogan. At its core, it’s an ongoing commitment to a better quality of life — the practice of treating your mind and body with care, aka nourishing them, exercising them, resting them, etc.

What we don’t talk about enough, though, is how important it is to treat our money with the same amount of care. Because it’s just as essential to your overall well-being, let’s call it financial wellness: the idea that when you have a handle on your finances, know what to do next to achieve your goals, take those steps, and regularly practice good money habits, you’re more likely to feel confident about where you are and where you’re going — your quality of life improves.

If financial wellness feels like a big, slightly complicated concept, here’s a primer on what it is, why it matters, and how to apply the basic principles to your own life.

What’s financial wellness?

At its core, financial wellness is the state of well-being that’s achieved and maintained when you know what you have, know where you’re headed, and feel good about it.

That means anyone can get there, no matter where you are in your financial journey or how much money you have. Everyone deserves to feel confident and in control of their finances — and the practice of financial wellness is adaptable and attainable for everyone.

It’s also an intentional practice, a way to live — not an end state to be achieved or destination to be reached.

Your Foundation

Your financial foundation is made up of the core building blocks that help create (or maintain) financial security. From good everyday habits like checking your balances and spending less than what you earn, to your first baby steps toward stability, a strong financial foundation is the sturdy ground on which you’ll be able to design the kind of life you want to live.

Those building blocks include (usually in this order):

1. Familiarize yourself with where your money goes. The way you live your life is unique to you, which is why it’s up to you to learn how your money moves, both in and out of your accounts. That makes it possible to a) double-check that you’re spending less than you make, and b) understand how much you have left to make progress on your goals.
   
2. Take advantage of free (retirement) money. If your employer has a 401(k) match program, sign up and grab that free money while you can. If your employer doesn’t have a match program, or if you’re self-employed / a contractor, skip this step for now.
   
3. Save one month’s take-home pay. These are wildly uncertain times we’re living in, full of unexpected costs and life changes. They’ve hammered home the importance of building a financial safety net for when life happens. Start your emergency fund by aiming to save up one month’s take-home pay as soon as you can — that will give yourself some breathing room while you make progress on the next step.
   
4. Zero in on high-interest debt. Most credit cards and even some personal loans come with super-high interest rates — we’re talking more than 10%. That’s really expensive, and it takes away precious funds that would be better spent on your actual goals. No matter how you approach it (there are a few different strategies, all of which involve paying more than your minimums), getting high-interest debt off the board ASAP is key to financial security.
   
5. Finish your emergency fund. Once you’ve tackled your most urgent, high-interest debt, it’s time to level up that emergency fund. How much money you should aim to save in total depends on your particular situation — the more unpredictable your life, the more you’re probably going to want to build up — but the general range is anywhere from three to six months’ take-home pay.
   
6. Move on to medium-interest debt. Now it’s time to take the debt payoff strategy you used for your high-interest balances and use it to tackle any debt with interest rates between 5% and 10%. (If you have any balances with interest rates less than 5%, we usually recommend continuing to pay the minimums and using extra money to invest instead.)
   
7. Invest toward your goals. You’re now in the clear to focus on investing, above and beyond that employer 401(k) match you set up. First order of business: getting on track for retirement.
   

Your Financial Plan

The fact is, most of us only have so much money to work with at any given time. The building blocks that make up your foundation are usually pretty straightforward, and come with a recommended order of action.

Enter: your financial plan, the strategy and steps you follow to help get you and your money where you want to go in life. It’s made up of the tools and timeline, all designed by you, that help you hit your goals.

Here are the things that will help you form your plan:

1. Your core values. Identifying your core values will allow you to spend more intentionally and make trade-offs more easily. It can also help you use your money in a way that will feel good — like identifying causes you want to donate to, or investing for impact. All in pursuit of living according to your priorities.
   
2. A spending plan that works for you. A spending plan built with your values in mind gives you permission to spend your money the way you want, all with the confidence that comes from knowing you’re on track for your goals.
   
3. Priorities for all your goals. Now that you know what’s important to you and how much freedom your budget allows for, making future plans for your money just got a whole lot more manageable. The key is to look at all your goals — short-term ones to save for, like next year’s vacation, plus long-term ones to invest for, like retirement — and start to prioritize them against one another.
   
   Some will clearly be high-priority, like the building blocks of your foundation, or saving up for an expense you know you’ll have to pay for soon. Others will be more nuanced, which is where your values come in. Say you’re investing toward a down payment to buy a home. That monthly contribution is in your budget. But then the opportunity to go to Europe next summer comes up. If you put that money toward the trip instead of the down payment, your timeline for homeownership is going to get pushed back. Knowing your core values — like what’s more important, the independence of owning your place or the freedom to roam? — can help make that decision easier.
   

Note: You don’t need to set up your foundation 100% before you make your plan — in fact, deciding which building block of your foundation you’ll tackle next is part of your plan. The components of financial wellness aren’t sequential steps — they overlap. You need all three to create a system that you feel comfortable and confident about.

Finally, of course, it’s not enough just to have a plan — you’ve also got to follow it. Taking whatever steps your plan recommends next is key to that feeling of financial wellness. In fact, our research shows that the #1 driver of women’s confidence in their financial futures is the act of saving and investing.

Which brings us to …

Your Mindset

Maybe your current situation feels more like financial unwellness — like everything in this plan so far seems built for someone with a lot more money, or a lot more financial know-how, or at least a better track record for making and sticking to a budget. What’s the point of a plan and a few good habits if you don’t believe they’re going to work? That’s where the third component of financial wellness comes in: your money mindset, a healthy relationship with not only your money, but also your own ability to manage it.

1. Identify and unlearn the harmful myths. Women aren’t more risk-averse, nor are they just “bad at investing” (the opposite, actually). Forgoing your daily latte won’t make you a millionaire. And as bad as it sounds, faithfully executing a strategy like the one outlined here isn’t going to fix systemic issues like the pay gap. Thinking about your money situation as a personal failure is a negative feedback loop that holds you back.
   
2. Get comfortable talking about money with others. How do women find out they’re making less than men at their companies? They talk about their salaries. Most people (especially women) would rather discuss their own death than talk about money, but that’s only because it’s not the norm. Allowing money to remain a taboo subject only protects people with more of it — specifically, the status quo.
   
3. Give yourself permission to use money in a way that makes you feel good. Rest on your foundation, and trust your plan.
   

Note: Much like your foundation and your plan, your mindset is a muscle that needs a chance to build up over time, alongside — and not after — those good habits and good strategies you’re working on.

Why is financial wellness important?

When it comes to money, every additional inch we carve out for ourselves matters. By practicing financial self-care in pursuit of financial wellness, you’re building the confidence and peace of mind to live the life you want.

At Ellevest, we believe nothing bad happens when women have more money, and that’s just as true on an individual level.

Financial wellness is a pretty fundamental necessity for other types of wellness, too. When your money isn’t OK, you’re likely not OK. Think of financial wellness as a powerful engine that helps make it easier to achieve wellness in other areas. For example, while you might currently be able to take care of your body while simultaneously ignoring your 401(k), the health of that retirement fund is eventually going to dictate your ability to address your physical health. Plus, as we mentioned above, money is our #1 source of stress. But practicing financial wellness is a way to directly counteract that stress.

You can start your journey toward financial wellness at any time, no matter how much you know about money (or how much you have). Think of each of the three components — your foundation, your plan, and your mindset — not as building blocks stacked on top of each other, but as support beams working together to create balance and harmony in your financial life, whatever it may look like.

How to get started

This is going to take some effort (as anything worth doing does). You’re going to need to set aside some time to establish your foundation and build a plan you’re excited about following. And those false core beliefs? They aren’t about to go down without a fight, so getting good at positive self-talk (among other things) is going to be key over the long term.

Feeling overwhelmed by money is extremely common, especially when you’re trying to unlearn self-defeating patterns at the same time. Think of your financial wellness program as your own financial bodyguard: The world is going to keep throwing harmful lies and stressful crises your way, but the steps you’re taking now are meant to help protect Future You (and Today You!) from the collateral damage. You’ve got this.

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