What are the 3 levels of Financial Wellbeing?

Financial wellbeing is something some people strive for their whole lives, but without the right tools and knowledge, it can be difficult to achieve. The first step is recognising the three stages that will lead to financial freedom, and which one you are currently in. Going from Financial Chaos to Financial Thriving is quite the journey, and each stage defines how your relationship with money looks like.

Stage One – Financial Chaos

Whether you’re having a tough time financially or you were never taught about money – financial chaos can put a lot of stress on your life. This stage can be clouded with emotions like fear, guilt and shame around money and can lead to avoidance, overspending or family conflicts around money and spending. 

Having no savings, unpaid bills and stress can lead to financial avoidance. You can see that there’s a money issue but are avoiding taking action to remedy it. You’ll likely need the help of an expert to get you out of the situation and remove those overwhelming negative feelings attached to the money in your life. 

To get out of financial chaos, it’s necessary to learn some financial literacy and understand the basics of personal finances, banking and how money works. This is an ongoing process but gaining this awareness is enough to help you break out of the cycle and start setting goals. 

Stage Two – Financial Awareness

In this stage, you’re ready to make changes to your relationship with money and start thinking more proactively about finances and your future. You start creating management plans to help you move closer to those goals that once seemed so far away. This stage is where you should engage a professional to help you gain knowledge and skills to set you up with more awareness around what’s possible for you, after all, you don’t know what you don’t know.

With more awareness, you may feel more confident in your choices as your knowledge of how to manage your finances, and that relationship has moved more into an optimistic and curious stage. Often it is wise to create some safeguards at this stage to ensure unexpected life events don’t put you back to financial chaos. 

Having this security you can prepare for unexpected life events and are actively moving towards financial independence. Now is the time to make the most of your money and make sure all your management plans are secure. Being knowledgeable and capable of making better decisions with your money, means you can now look at all your financial options and evaluate what to prioritise.

Once you have worked up enough security so that your income is enough to cover monthly expenses, it’s best to ensure a safeguard if an emergency appears – so that it won’t derail your finances as you’ve planned for this kind of event. 

Stage Three – Financial Thriving 

When you reach financial thriving you have the surplus income to live the life you want. At this stage, it’s crucial to have regular check-ins with your financial planner or whatever professional you have to keep you on track and to grow and protect what you have worked to do so far. Confidence in your financial decisions ensures you have all the tools you need to keep you on track and to thrive further. You can now spend money in a way that aligns with your values and your financial security is not a risk at any given moment. 

This is the final stage of financial wellbeing. Now being financially free, you can choose how you live. Making money is no longer a priority, but a choice. You now should have a high level of financial knowledge, have enough wealth to live however you choose, and spend your money mindfully – you have regained your control.

If you are in Stage One then it may feel impossible to achieve financial independence or freedom, but that’s not true. A large factor in this process is having someone by your side to consult and suggest your next steps and make those big tasks seem easier. These things are based on individual lifestyles and can vary from person to person. 

Want to move from financial chaos to financial thriving? Contact us today.

Other Articles

The 50/30/20 Rule

Budgeting can seem daunting, but it doesn’t have to be. The best ways to budget are often the simplest. The 50/30/20 rule is an example

Read More »