For most people, finances are a major source of stress. Even if you’re earning enough to live comfortably in the moment, you may still have doubts about your future. Would you be able to rebound if the market took a downturn? Would your family be okay if something were to happen to you or your partner? Will you be able to live the same lifestyle as you do now in your retirement?
At Team Hewins, we aim to alleviate these worries by serving as your guide to financial wellbeing. But what is financial wellbeing exactly, what does it look like, and how can you work toward it? Read on for the answer to these questions and more.
Why Financial Wellbeing Is So Important
Finances affect most areas of our lives, for better or worse. From relationships and work to mental and physical health to emotions and relationships, money can make these areas feel better or more challenging.
Ninety percent of Americans report that financial considerations affect their stress levels, according to a joint study from Thriving Wallet1. The good news is that in the same study, 40% of people reported they are already taking notable steps to secure their financial future. And if you’re here, you’re probably one of those four in 10 people. Give yourself a pat on the back.
→ We invite you to take some time to think about how your finances affect various areas of your life. Becoming aware of its influence can be the first step in making a positive change in your financial wellbeing.
What Does Financial Wellbeing Mean to Us?
There isn’t one definition of financial wellbeing. It’s a feeling and a state that has a slightly different meaning to each person. It complements your financial goals, which also vary – from saving up for a home to retiring abroad.
In a broad sense, though, you can think of it as “a state where your finances are very healthy,” said Karl Schwartz, Principal, & Senior Financial Advisor at Team Hewins. “You’ve assessed your overall financial situation, identified which areas need to be addressed, and worked through those items.”
This means that “you have a full understanding of your assets and liabilities as well as a roadmap for your personal goals,” added Patrice Cresci, Principal & Senior Financial Advisor at Team Hewins. “And you know that if anything happened to you, your family would be taken care of.”
In the end, this gives you “the confidence that your finances are in a place where you’re going to be able to live your life the way you want to,” said Martha Post, Founding Member at Team Hewins. “You don’t have to worry day to day about things that come up, because you’ve planned for contingencies.”
What Does Financial Wellbeing Mean to You?
Financial wellbeing is personal journey. As such, you get to define what it means to you. It depends on your values, goals, and financial situation. These factors all affect what’s most important to you right now.
Confidence, peace of mind, and having a plan are part of our definition, because we see the importance of these qualities among our clients. This may all be part of your definition because financial wellbeing really is where your money meets your life.
→ So, what does financial wellbeing mean to you? Consider where you are starting, where you want to be, and what is critical to you feeling confident in your financial life.
How to Work Toward Financial Wellbeing
After answering “what is financial wellbeing,” the next question is naturally “how do you achieve it?” Here’s what our team recommended.
Step 1: Partner With a Financial Planner
Many people delay dealing with their finances simply because they’re intimidated by the time and effort it could take, or they are scared of the unknown. In this case, hiring a financial planner can be helpful.
“Financial plans can be overwhelming — whether it’s dealing with paperwork or reaching out to different professionals like CPAs or estate attorneys— but we coordinate all of that, so you can spend more time with your family or on the things you want to do,” Post shared.
You can also “be confident in their skill, training, and education” to help you make the most informed decisions possible, Post said.
“When you work with somebody at a firm who’s very experienced, they know what to look out for,” Schwartz explained. “If you come up with your own plan but don’t have a background or education in finance, how confident can you really be in it?”
And just as critically, financial planners can help hold you accountable.
“It’s easy to think ‘I need to rebalance my portfolio, but I don’t have time right now — I’ll do it next week,’” Post said. “But we don’t just come up with a financial plan and say ‘Here you go.’ We check back in, and we’re updating things all the time.”
Of course, you don’t want to just go with any financial planner — you’ll want to find one that’s truly a good fit for you.
“Find an advisor who will really be a partner — one that focuses on you instead of just selling products that will earn them commissions,” Post advised.
Read More: What to Look for in a Financial Advisor: 6 Essential Qualities
Step 2: Understand Your Current Finances & Goals
Before you can actively work toward financial wellbeing, you have to understand what the current state of your finances is.
“At Team Hewins, we sit down with clients and really learn about them. We do an assessment of their financial life by going through and gathering as much data as we possibly can on their financial life,” Schwartz said.
This will include looking at factors like:
- Income
- Expenses
- Account balances
- Credit card
- Checking
- Savings
- Retirement accounts, such as 401k(s) or IRAs
- Brokerage accounts
- Other assets (e.g. car, home)
- Insurance policies
- Health insurance
- Life insurance
- Home insurance
- Car insurance
- Disability & long term care
- Debt (e.g. home loan, student loans)
- Income Taxes
Just as important as those factors, though, is “finding out what’s important to someone and what their goals are,” Schwartz added.
When thinking through these goals, you’ll want to make sure you get specific.
“Many people haven’t thought much about their goals yet,” Post said. “They may know they would like to buy a house someday, but you need to think seriously about things like what you want your life to be like, what things you want to spend on and how much, and what you’ll leave your family to make sure they’re in a good spot.”
Step 3: Come Up With a Plan
At this point, you’ll be ready to come up with a plan that actually allows you to reach the goals you’ve identified.
At Team Hewins, we do this through an approach called Smart Life Planning, which involves coming up with a strategy for “a number of different areas, from cash flow planning to tax planning, portfolio management, insurance, and estate planning,” Cresci said. “We touch on all aspects of someone’s financial life and make sure that our plan addresses it.”
“It’s also a matter of prioritizing what needs to be taken care of first,” Schwartz explained. “We help clients identify which time-sensitive issues they need to address right away (e.g. cash flow management) and which they just need to start thinking about for later (e.g. disability insurance, estate planning).”
One of the most critical parts of this plan is an investment strategy, as this tends to be the driving factor in helping you accumulate wealth. While it can be tempting to choose stocks based on the buzz around them, remember that a long-term approach is the way to go.
At Team Hewins, our investment approach is “very strategic,” Cresci said. “We don’t try to get fancy or outsmart the market — our investment approach is very research-based.”
“We take a long-term, evidence-based approach, not a reactive one,” Post added. “We’re not going to immediately rearrange your portfolio just because the Fed raises interest rates or Jim Cramer recommended a specific stock, because we know that people cannot consistently outperform the market.”
Read More: How Financial Advisors Choose Investment Strategies
Step 4: Adjust Your Plan as Needed
While you shouldn’t rearrange your portfolio after every bump in the road, it is important to adjust it over time according to factors like how much risk you can tolerate at a given moment.
“Even after we create your portfolio, we will continue to invest it and manage it to make sure that it’s aligned with what you want over time,” Post said.
“We assess how much risk a client needs to take, and then make sure that they’re invested at a level that is appropriate for them and their financial plan,” Schwartz explained.
For example, “if you’re going to buy a house in a year, we’re not going to invest it the same way as we would invest your retirement money — you need more liquidity,” Post added.
And with someone to proactively manage your plan, you can breathe easier during market fluctuations.
“The nice thing is that you can stop worrying about those day-to-day issues that come up. Our clients will come back every six months or so, and we can update their financial plan at any time,” Post shared.
Visualization software can even show the impact of certain financial decisions or market events, so you can make changes if necessary.
“Even if the market goes down and a client’s portfolio is down 10%, we can say ‘Look, you’ve still got enough money to last you to 100.’ Or if they don’t, maybe they want to cut spending a little bit,” Post said. “Being able to look at those different scenarios gives you peace of mind.”
Arriving at Financial Wellbeing
In the simplest terms, that’s the exact answer to “what is financial wellbeing” — peace of mind. As we mentioned earlier, that will look a little bit different for everyone.
“I went to lunch with a client not too long ago who used to log in and track her accounts every single day. That day, she told me ‘I haven’t looked at my accounts in months. I know that you’re looking at it every day, so I don’t have to,’” Cresci shared.
For one of Schwartz’s clients, financial wellbeing meant becoming secure in her own ability to manage her finances after her husband passed.
“We were able to help her get through the financial implications of her husband’s passing, then provide a more general financial education in a manner that she was able to easily digest. Over time, you could tell that she was more and more comfortable. Now, she’s very confident,” he said. “She doesn’t worry about running out of money, or that anything will derail her plan — she just feels good about it.”
Whatever your vision of financial wellbeing is, Team Hewins would love to help you get there. We’ll partner you with a planner that’s uniquely qualified to help you based on their background and specialty — reach out today to schedule a free consultation.