Financial Wellness Guide

If you are new to financial wellness or have ever wondered how to improve your personal financial life, this in-depth guide will help you.

This guide to financial wellness is broken down into 6 parts.

Let’s get started.

What is Financial Wellness

Financial wellness is the active process of combining financial awareness, financial literacy, financial behaviour and financial satisfaction to achieve personal financial wellbeing.

The pursuit of financial wellness helps you reflect, understand and appreciate your relationship with money.

We spend a major part of our waking hours doing things to earn money. So much so that making a living almost defines who we are.

We go through life making decisions about money without giving much consideration on how they all add up. However, as your career progresses you realise that just earning more money does not deliver a long term, overall feel good effect.

Concerns around money start becoming a source of worry and stress. These money worries impact our health, personal relationships as well as our performance at the workplace.

This hurts both you as an individual employee and your employer as a business. Your ongoing concerns about money could impact your career growth as you can’t deliver to your full potential at work.

Financial wellness is about approaching personal finance in a holistic manner, looking beyond just earning and spending money. It looks at money issues in terms of how they interact with other parts of our lives and behaviour.

Pursuit of money in isolation can lead to loss of meaning and purpose. We all have an inherent need to improve our relationship with money so that it leads to a more fulfilling life.

The idea of financial wellness addresses this very need for a long term and meaningful relationship between money and you as an individual.

Pillars of Financial Wellness

The 4 pillars of financial wellness are financial awareness, financial literacy, financial behaviour and financial satisfaction.

These 4 pillars form the basic foundation of financial wellness.

Each of these pillars is important in its own right. At the same time, it also needs the active support of the other 3 pillars to develop a strong base for your overall financial wellness.

4 pillars of financial wellness

Financial Awareness

Financial Awareness is the condition of being conscious about your current financial state. It involves the recognition of your present emotional as well as practical financial condition.

Financial awareness allows you to identify the starting point of your financial wellness journey. It is the first step in identifying if you have the financial life that you aspire for.

Very few people take the time to do this exercise. As a result they stumble from one financial decision to the next without an active awareness of the choices they are making.

Our busy lives do not allow time for such self-reflection. For most working professionals “just winging it” is the most common strategy when dealing with money.

financial awareness for financial wellness

Financial Emotional Awareness

Emotional awareness is a subjective measure of your current financial condition.

It involves a self-reflection on your feelings about the present state of your financial life. Depending on your individual situation these can span the entire range of emotions.

Your emotions can range from fear & shame at one end to contentment & pride at the other end.

How you feel about your current financial condition is unique to you. It could be different from the emotions that someone else in a similar condition experiences. Your social environment and personality play a major role in the emotions triggered by your current financial state.

Irrespective of how you are feeling at the moment, being aware of your current emotions is important. It helps to identify the next steps you need to take on the path of financial wellness.

Financial Practical Awareness

The second part of financial awareness is the objective measure of your current financial condition.

It involves getting a clear visibility about the physical facts of your financial life as of today. This includes having a good understanding of your current income, bank balances, loans or any other financial liabilities.

As we progress in our careers, we invariably pick up things that clutter our lives. Think of that souvenir that you picked up on a beach holiday many years ago. Today it may be lying in a closet collecting dust.

In a similar manner we also end up with clutter in our financial lives. A credit card that came with an airline offer that looked great at that time or a bank account you had opened when you were a student in another city.

Financial awareness involves picking up all these pieces of your financial life and laying them out in front of you. Make a list of all the financial products that you currently have such as your bank accounts, investments, cards, debts, insurance.

As part of this exercise you might even discover stuff you never realised you were holding on to.

This process of getting practical financial awareness gives you a starting point as you begin the pursuit of financial wellness.

Financial Literacy

Financial literacy is the process of acquiring the knowledge and ability to make well-informed personal finance decisions.

Unlike common subjects like math or science, financial literacy is not taught in most schools. It is up to each individual to figure out a way to get this knowledge.

This learning can’t happen over-night but is not something that requires above average intelligence. All it takes is a desire to keep getting better at it.

You are very capable of learning about personal finance, no matter at what age you start learning.

The easiest way to get financially literate includes books as well as online resources. The internet is full of resources (websites / videos) to help you learn about personal finance.

The most important thing you can do when it comes to financial literacy is to aim for simplicity. The simpler the idea, the more likely that you will actually follow through with it.

Whether it is about coming up with a simple financial plan or a simple rule of buying life insurance, just follow the mantra of simplicity.

Financial literacy consists of 7 key areas:

financial literacy pillar


The government has one. Your employer also has one. And there is a good chance that some of your savvier colleagues have it too.

What they all have is a budget.

A budget is a tool to keep track of your income and expenses over a period of time. You could have a monthly, quarterly or an annual budget.

Having a budget to work with is the first step of financial literacy. A budget allows you to track where the money is coming from each month and where is it going.

Your earnings may be coming from multiple sources – Your salary, some rental income or a financial gift from loved ones. Similarly your regular expenses may consist of areas like rent, food, fees, entertainment and transport etc.

You might think you only spend a small amount each month on entertainment. However, once you put all of these expenses in your budget, it might show that 25-30% of your monthly expenses is going towards entertainment related expenses.

Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are – James Frick

The purpose of a budget is to give you the hard numbers to work with. It also takes away the guess work and gives you the facts.

Once you see where your money comes and goes, you can start taking steps to change your habits. This includes taking steps that allow you to earn more or spend less.


Saving money is probably the most common advice you heard growing up. A dollar saved is a dollar earned.

The easiest way to explain the concept of saving is as below:

What You Earn – What You Spend = What You Save

Earning more or spending less both help to increase what you manage to save. If you can do both at the same time, the impact on your saving is even better.

The amount of money you are able to save each month has a big impact on financial wellness. We live in a world that wants you to keep spending. There is always going to be some tempting product on offer.

How well we cope with the temptations around us will decide the actual savings we end up with.

If you buy things you do not need, soon you will have to sell things you need – Warren Buffet

Now, it is natural to assume that earning more should result in more savings. But things don’t always pan out that way due to lifestyle creep.

Lifestyle creep is defined as the increase in lifestyle expenses as your quality of life improves. Just like inflation, lifestyle creep is an enemy of savings. It is also mostly invisible as it happens in small steps and over a period of time.

Think about this – When you were a kid you could have an egg for breakfast. Any egg was just an egg.

But that is no longer the case today. Now you can choose between organic eggs, free range eggs, antibiotic-free eggs or eggs with Omega 3.

All these options increase the price that we end up paying to have an egg for breakfast.

This is how lifestyle creep works its way into our lives.


Debt is a magical tool that allows you to spend today, the money you will earn tomorrow.

When used wisely debt allows to you achieve things in life much earlier than otherwise would have been possible. Saving up money to buy things is a slow and long process. Debt can speed up this process by letting you have those things much faster.

That is the positive part of debt.

There is of course a flip side to that. You exchange your financial freedom in return for taking on debt. From this point on you are no longer the master of your own financial destiny. It is now controlled by the person who lent you the money.

Debt means you had more fun than you were supposed to – Greg Fitzsimmons

The decision to take on debt can be a very emotionally charged decision. If not handled well, you run the risk of losing your money as well as the relationships you may have built over the years (or even decades).

Getting rid of any debt is an essential part of your ability to pursue financial wellness. The emotional cost of handling debt can far exceed any financial costs that you may incur to repay that debt.

Self-discipline, persistence and the willpower to avoid temptations are the key facets of an individual’s personality that determine if someone falls into the debt trap or not.


Investment is the act of making your savings work for you. It helps to grow your savings into a much larger sum a few years down the road.

Saving money is a necessary but not a sufficient condition to create wealth. It is not good enough to just save money and stop at that.

The key to greater financial security is to wisely invest the money that you are saving. It is the growth in the value of these investments that ultimately makes you richer.

You don’t have to be smarter than the rest. You just have to be more disciplined than the rest.

Investing is also the area where you are likely to make your big financial mistakes.

The biggest risk to your money is not from a thief breaking into your house. A bigger threat is greedy salespeople who trick you into buying unsuitable investments.

Your only defense against this is a willingness to learn the basics of personal finance.

Here are a few pointers to avoid some common mistakes when investing:

  • If an investment seems too complex – Don’t buy it.
  • If an investment sounds too good to be true, it probably is.
  • No one has a Get Rich Quick secret – (and even if they did have one why would they want to share it with you anyway).

There are 2 parts to achieving success with your investments. The first part is about picking a suitable investment product.

The second part involves having the self-control and patience to let it grow over a period of time.

It is way harder than it sounds – Not doing anything can be really hard to do!


Insurance is all about the emotion of fear. The whole messaging around insurance is built around fear. The fear of things not going as per plan.

To some degree the fear is justified. There is no way to know for sure what lies ahead in our life, health or on the road we are driving on.

So preparing for the risk of something going wrong makes sense. Hope and prayer alone may not do the job – You do need insurance.

You can never run out of things that can go wrong – Murphy’s Law

Here is the thing to understand though – Insurance can’t prevent things from going wrong. Insurance will instead help you financially if things do go wrong.

Life insurance is not about life – it is about our unfulfilled financial obligations if we leave this planet.

If you have no financial obligations or have met all your financial goals, you may not even need life insurance.

Understanding your individual risks and then insuring only the risks that need covering is the key point. This applies for both life and non-life insurance purchases.

A common personal finance mistake it to mix up investment and insurance in a single product. Doing so almost always results in poor financial outcomes.

Always keep your insurance plans separate from your investment plans.

Insurance linked products make for poor investment choices. Insurance should only cover your financial risks if things go wrong in life. It is not a tool to grow your savings.

Insurance linked products are one of most profitable areas for the people selling them 🙂

So be prepared for some real hard selling coming your way.

Financial literacy will help you figure out which kind of insurance you need and how much.


We are good at recollecting what happened yesterday or the day before. However, go further back and our memory starts to blur.

You can easily recall what you had for breakfast today or yesterday. But it can be hard to recollect what you had for breakfast 9 days ago. Go ahead give it a try!

The same happens when we think of the future. We can easily visualise and prepare for things that are likely to happen tomorrow or the day after.

But as we increase the planning horizon things are not so clear anymore.

Since retirement is an event that happens far into the future, it is very difficult to make it real in our imagination. As a result, it is easy to avoid saving for retirement and instead use the money for something you can buy now.

This can turn out to be a fatal personal finance mistake.

Many people realise this mistake when they are getting close to retirement. Unfortunately, at that point in time it becomes very difficult to make up for the decades that went by without saving properly for retirement.

Hard work pays off in the future. Laziness pays off now – Steven Wright

Saving for retirement consists of two parts. The first part is the compulsory saving driven by your employer. The second part is your voluntary saving on top of the compulsory saving.

Depending entirely on a very generous pension plan from your employer may have worked in the past. Sadly, those days are long gone.

You now need to actively include voluntary retirement saving in your financial plan. It is the only way to maintain the quality of life in retirement that you have become used to.


It is human nature to want to leave a legacy. For some it may be about leaving a good inheritance for your loved ones. For others it may be a desire to support a social cause close to their heart.

No matter what you prefer, it is important to plan for it while you are still around. Putting in place a WILL or a Trust with clear guidelines will ensure your money is used as per your desires.

Only you know best what you want. So your legacy plan should be made out to match those requirements.

It can be done at any stage of your life and the earlier you do it, the better.

This 2nd pillar of financial wellness is about recognising that you are responsible for learning the basics of personal finance.

You don’t need to be great at math or a nerd to learn the basics of personal finance. It is easier than you think once you start the learning process.

Gaining a good understanding of these 7 financial literacy concepts will propel your financial wellness journey forward.

Financial Behaviour

Financial Behaviour is the way you feel, act and conduct yourself in a situation that involves making a decision about money.

Being financially literate lets you figure out the right thing to do when it comes to making personal finance decisions.

But it assumes that we humans are rational beings i.e. that we always act in ways that are in our best financial interests.

That is a big assumption to make and real life tells a different story.

We don’t always make the right choice each time we have to make a financial decision. This is despite having the knowledge and education about what we should do.

financial behaviour to financial wellness

As human beings the decisions we make in life are impacted by our behaviour, personal values and attitude. Just because we know what we should be doing, does not mean we actually do it.

The evidence of this is all around us – doctors who smoke, sports coaches who are overweight and passengers who refuse to wear seatbelts.

The doctors do know about the negative impact of smoking just like the sports coaches who are also aware of the health risks from obesity.

Yet, they act in ways that defies the simple logic of what they should be doing. So what explains this?

The answer lies in our personal behaviour and personalities.

Our financial behaviour sits between the knowledge we gain from financial literacy and what we actually do when making decisions.

Financial behaviour is about the ongoing conflict between our head and our heart. Our head tells us what we should be doing based on cold hard calculations. Our heart brings emotions into financial decision making.

This 3rd pillar of financial wellness is about recognising that our behaviour can, at times, cause us to act in ways that hurt our personal finances.

Financial Satisfaction

Financial Satisfaction is a state of contentment about the financial choices we make and the life outcomes those choices lead to.

We live in a world of ever expanding choices. While the number of choices around us keep increasing, we are limited in our ability to pick all that is on offer.

Financial satisfaction comes from our inner beliefs that we have picked a choice that is good enough for our needs at that point in time. Yes, there will always be other options that are shinier, newer or faster but thinking about them will only breed discontent.

financial satisfaction

It is common to feel regret about the choices you did not make and options that you let go. However, we tend to over-estimate the happiness we would have gained from those missed opportunities.

Worrying about money is normal but the key is to do it the right way. Pursuit of material goods may deliver short term pleasure but it seldom leads to a long lasting feeling of contentment. We quickly adapt to whatever we own or experience.

Of course the business world wants us to believe that the route to happiness lies in buying more stuff. The capitalist model is built on an ever increasing consumption of goods and services on offer.

Now purely from a selfish point of view of being an investor, we don’t want everyone to start pursuing financial satisfaction. If everyone only sought financial satisfaction, the economy would collapse – And so would the value of our investments!

The good news is that it is unlikely to happen. That is because a very small percentage of people in the world think or act this way.

Even the simple act of reading this guide to financial wellness makes you a part of this very small minority.

How to Improve Financial Wellness

Financial wellness can be improved by making simultaneous progress on all the 4 pillars of financial wellness.

Improving Financial Awareness – Talk to your spouse and close friends about your money concerns. Bring your feelings out of the closet and discuss them with someone you can confide in.

Giving a voice to your emotions will help you to better understand your own feelings about money. You are not alone. Everyone around you has money issues that they are dealing with too.

Improving Financial Literacy – If you learn better by watching or listening, watch a video or listen to a podcast. If you prefer to learn by reading, get hold of a book or a website like dushyantnomics 🙂

There are tons of free resources out there a simple click away. All it takes is a little initiative from your end to get started.

Improving Financial Behaviour – We don’t always do what we know or are told. Furthermore, we are much more likely to notice this behaviour in others rather than ourselves.

Accept that your behaviour will at times make you do things which may not be in your long term interests. If required, get a partner to help you stay the course and save you from yourself when required!

Improving Financial Satisfaction – We live in a world of unlimited choices faced with our limited personal resources. What makes sense for someone else does not need to make sense for you.

Don’t care about what others will think of your money choices. Be true to your own feelings and values when it comes to making decisions about money.

Financial Wellness Tips

Here are 9 tips to improve financial wellness:

  1. Embrace minimalism in your personal financial life.
  2. Use money to buy time.
  3. Set specific, measurable and time-bound financial goals.
  4. Aim for a debt-free life.
  5. Learn to let go. You can’t pick all available options for everything.
  6. We always over-estimate how well or bad any financial choice will make us feel.
  7. Ask your spouse or partner to be part of your pursuit of financial wellness.
  8. Spend money on experiences, not things.
  9. Practice gratitude – No matter what your current financial condition is, things could have been much worse.

The 5 Stages of Personal Finance Life

The personal finance condition that an individual experiences at any given time fits into one of 5 broad stages.

The first stage of personal finance is financial ignorance. As you continue up the pyramid you face financial anxiety, financial maturity and financial pride.

At the top of this pyramid is the stage of financial wellbeing.

5 stages of personal finance life

(An important point – Financial wellbeing is not dependent on a specific level of physical wealth. It is unique to you and linked to your personal values)

Financial Ignorance

Financial ignorance is marked by a state of ignorant bliss. Professionals at this stage are making no active effort to make sense of their financial lives.

Real knowledge is to know the extent of one’s ignorance – Confucius

The vast majority of working professionals remain at this step. Other priorities in their professional or personal life command greater importance.

It is not that people at this stage are not earning well. However, there is no active recognition of the current state of their personal finances or their relationship with money.

Physical Signs of Financial Ignorance

  • Buying ad-hoc financial products just to save tax.
  • Taking on costly debts for impulse purchases.
  • Unable to follow basic personal financial rules.
  • Acting penny wise and pound foolish when dealing with money issues.

Emotional Signs of Financial Ignorance

  • Living only in the present with no regard for the future.
  • Active avoidance of any discussion on personal finance.
  • Seeking pleasure purely from material comforts.
  • Blind trust in whatever any financial agent or salesperson has to say.

Moving on from this step is the most difficult part of the financial wellness journey towards financial wellbeing.

Professionals in this group are also most likely to be sold unsuitable financial products by greedy salespeople. Over a period of time this group loses all hope of being able to make any difference in their financial lives.

Very few people make an active choice to move on to the next stage voluntarily. This is without regards to their level of education or career stage.

In fact, having a successful career may make it even more difficult to recognise this condition or seek help.

It usually takes a personal financial crisis (of some sort) to shake people off this step.

Financial Anxiety

The move up the pyramid from financial ignorance is met by financial anxiety.

Your financial life is now suddenly in the spot light. You realise where you currently are and things that you will need to change. You may wonder why it took you so long to get to this stage.

At the same time you realise that financial wellness offers you a path to a brighter future. You begin to get optimistic that you may see results if you put in the work required.

Physical Signs of Financial Anxiety

  • Seeking advice from various sources to learn the basics of personal finance.
  • Starting to get organised with your financial paperwork.
  • Blind trust starts giving way to informed choices on money.

Emotional Signs of Financial Anxiety

  • Regret about personal finance decisions made in the past.
  • Fear of not having enough time left in their career to make amends.
  • Guilt about spending money on wants instead of needs.

This is the most important stage on your journey towards wellbeing. You have made an active choice to do something about your improving financial life.

Getting to this stage is winning half the battle.

Financial Maturity

You have now acquired the ability to respond to the financial environment in an appropriate manner. As you experience financial maturity you realise that everyone has their own personal journey when it comes to money.

Some things that make sense for you financially may not make sense for others. Your financial decisions are now aligned to your personal life goals and values.

Physical Signs of Financial Maturity

  • A lifestyle that is almost aligned with your current financial condition.
  • Clear visibility of your personal finance goals /targets.
  • Your daily financial habits are aligned with your long term financial goals.

Emotional Signs of Financial Maturity

  • Worrying (but in a positive manner) about your financial future.
  • Confident in your ability to reach your financial goals over a period of time.
  • Saying no to spending choices without regrets if they don’t align with your goals

Financial Pride

The stage of financial pride is marked by a deep sense of satisfaction about your financial journey thus far.

You overcame financial troubles and made sacrifices. The result of those short terms sacrifices for long term gains are now bearing fruit.

The finish line for your financial goals is within sight. You are getting in shape to not just reach your goals but also to face any economic uncertainty the coming years may throw at you.

Things are about to flip – You will no longer need to work for money. Your money will now be working for you.

You are getting ready to hit financial independence. You could even choose to retire early.

Physical Signs of Financial Pride

  • A lifestyle that is fully aligned with your current financial condition.
  • Time spent dealing with money issues is now drastically reduced.
  • Minimal (or nil) outstanding financial liabilities or debt.

Emotional Signs of Financial Pride

  • Feeling of achievement about your financial wellness journey thus far.
  • Confident about your ability to reach the state of financial wellbeing.
  • Easily making trade-offs between your financial needs and wants.

Financial Wellbeing

At the top of the pyramid is the stage of financial wellbeing.

Financial wellbeing is defined as the attainment of peak personal finance state by an individual. It is a peak in the emotional as well as physical state of an individual’s personal finances.

Financial wellbeing is a state that allows you to achieve personal wellbeing without any financial constraints.

It does not mean that you have unlimited money to spend. What it means is that now your wealth allows you to maximise your happiness and personal wellbeing.

Reaching a state of financial wellbeing allows you to dedicate even more time to pursue social, emotional and physical wellbeing.

Physical Signs of Financial Wellbeing

  • Able to make personal lifestyle choices without regard for money.
  • All your financial goals have been achieved.
  • Using your money for causes that are dear to you.

Emotional Signs of Financial Wellbeing

  • Clearly understanding what is important to you in life and giving back to society.
  • Not concerned about what others think of your money choices.
  • Spending time to boost the other factors of your personal wellbeing.

How to Manage Your Financial Life

How well you manage your financial life has a direct impact on other parts of your life. This includes your personal, social and professional relationships.

The condition of your personal financial life can have an impact on your work performance too. Surveys have found personal financial concerns as a key cause for stress, absenteeism and lower work productivity.

The line between our personal and work lives continues to blur with every passing day. With increased penetration of mobile phones and tablets, it is hard to pin-point the cut-off point between our personal and work self.

As a result we continue our corporate behaviours in our personal life as well. Some of these corporate behaviours can hurt our personal finances.

On the other hand some positive features of professional life like clear deadlines, IT skills and goal setting can be put to good use in the arena of personal financial life as well.

Here are 3 things you can do to manage your financial life more effectively:


Your financial priorities should be aligned with your life priorities. If they don’t align, it will most likely lead to personal stress a few months or years down the road.

What is important to you is unique to you as an individual. Your life’s priorities should dictate how you manage your financial life and not the other way round.

We only have a limited amount of financial resources at our disposal. Therefore it is important to focus these resources on things that will get you the greatest value and help you to reach your life goals.


Just like other areas of your life, a simpler financial life is much easier to manage compared to a one filled with distractions.

The world around us is filled with noise urging us to load up on more financial products. The more things you add in your financial life, the more difficult it gets to keep track of everything.

A clutter free approach to financial products will make it easier to have a desirable financial life.

Know What You Can Control (And What You Can’t)

When it comes to personal finance the “personal” part is way more important than the “finance” part.

Financial literacy can give you an education about the investing process and products. However, there is very little you can do to control how those investments will perform.

What you can control (to an extent) is your personal behaviour when it comes to making financial decisions.

So don’t spend time and resources worrying about things you can’t control. The direction of the stock markets or interest rates is not something you can influence.

Instead use that time to get better at understanding and guiding your personal behaviour when making financial decisions.

Challenges to Managing Your Financial Life

Financial wellness offers the opportunity and tools for moving from where you are now to a state of financial wellbeing.

But just like most journeys in life, the path is not without some obstacles. Being aware of these obstacles in your financial journey will help you to tackle them more effectively.

Here are some common obstacles that can keep you from achieving a better financial life:

Talking About Money 

Even though we may be experiencing some trouble in our financial life, we don’t readily seek out help from our co-workers or friends. That is because any discussion about money is taboo in most environments.

In addition, poor financial management could be seen as a sign of a wider self-management issue with an individual. As a result, people are not keen to share these aspects of their personal lives with others.

It is OK to ask for help and there is no shame in it. It is even more important to seek help when making decisions where the feedback of the decision will reach you after a long time.

This includes big (but infrequent) financial decisions like saving for retirement, buying a house or taking on a large loan.

In addition, don’t just rely on a single source for advice when making a major financial decision. Try and validate the advice you receive from 1-2 other independent sources.

Financial Regret

It is rare to find someone who has never made a mistake when it comes to personal finance. You can probably recall a financial decision that you regret and wish you had made differently.

While it is normal to feel regret about a past mistake, the real challenge is to stop it from paralyzing your future decisions.

Letting go of past financial mistakes is important for moving forward in your financial wellness journey.


Practicing financial wellness offers the path and opportunity to improve your financial life.

All you need is a willingness to actively work on your financial awareness, literacy, behaviour and satisfaction.

Resources on Financial Wellness

Financial Awareness

The Complete Guide to Calculating Your Net Worth

How Do You Really Feel About Money?

Financial Literacy

10 Books That Improve Your Financial Literacy

The Complete Guide to Mutual Funds

National Centre for Financial Education

Financial Behaviour

An Introduction to Behavioural Economics


Thinking Fast and Slow – Daniel Kahneman

Misbehaving – Richard Thaler

Financial Satisfaction

Achieving Contentment


The Paradox of Choice – Barry Schwartz

Stumbling on Happiness – Daniel Gilbert

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