Happy Lunar New Year from all of us at Silver Oak!
January 22nd marked the beginning of the Lunar New Year. Each year in the Lunar calendar represents one of the twelve zodiac animals. 2023 is the Year of the Rabbit, representing longevity, peace, and prosperity. The beginning of a new year brings new opportunities to realize our goals and resolutions. Our goal at Silver Oak is to support our clients to achieve better financial well-being.
According to the Consumer Financial Protection Bureau, “financial well-being is defined as having financial security and financial freedom of choice in the present and in the future.”
From working with people across various financial circumstances, we observe that the best gauge of financial well-being is not the amount of money we make or have, but rather our feelings related to our financial security and freedom. People with the same income and wealth levels may have vastly different senses of financial well-being. For example, those who are satisfied with their standard of living, do not worry about money in their everyday lives, and have confidence in their financial future have thriving Financial Well-being. On the other hand, even the wealthiest among us may not obtain financial well-being if money stresses consume their thoughts and relationships.
Four Elements of Financial Well-Being
As shown in the table above, financial well-being encompasses the financial decisions we make both today and in the future. Regardless of your income and wealth levels, we can boost financial well-being by implementing the following strategies:
- Simplify your financial life and keep it organized. Establish default systems (i.e., automated payments and savings) that lessen daily worry and stress about money.
- Spend wisely to maximize your enjoyment and freedom. Research shows that we experience more happiness by:
- Spending on fond memories (such as vacations and outings with friends) versus material goods.
- Spending on others (such as gifting and charitable donations) versus on ourselves.
- Spending on services and conveniences (such as house cleaning) that free us time for the activities and people we enjoy the most.
- Build financial reserves and protections for emergencies and catastrophic events.
- Create a roadmap to fulfill long-term financial goals with disciplined saving and investing.
Money is easily counted but is a highly subjective matter in our lives. We can all feel the need to compare up and not be satisfied with what we already have. While our society leads us to believe that wealth accumulation should be our ultimate goal, the largest impact we can have on improving our financial well-being is through building our work and social well-being. If your daily work or activities are fulfilling and your relationships are strong, you are substantially less likely to get caught up in this comparison dilemma and more likely to feel a sense of thriving financial well-being.
*Based on the book by Rath, Tom; Harter, Jim. Wellbeing: The Five Essential Elements. Gallup Press.
May all of us experience more joy, peace, and a sense of financial well-being in the year of 2023!