6 Steps for Financial Wellness, According to a Life Coach

by | Updated: May 8th, 2022 | Read time: 4 minutes

Here’s a form of wellness we all know about, even if we don’t call it by its name: financial wellness.

Everyone needs money to live. But how each person finds it, handles it and thinks about it varies.

“Our life experience is a direct reflection of our beliefs,” explains Linda Mbagwu, who coaches executives and entrepreneurs through the personal-development platform Guidely.

Financial Wellness Concept Represented by Woman Organizing and Paying Bills on Couch in Living Room | Vitacost.com/blog

Our beliefs about money and our mental and emotional relationship to it start in childhood.

“We exchanged lost teeth for money from the tooth fairy, whether our parents had money or not determined if we could go on the school trip, it determined whether we got the toys we wanted or wore cool clothes,” Mbagwu says. “Seldom do we examine the impact paper and coin currencies have on our mental and emotional wellbeing — unless there is a crisis. A crisis is usually the catalyst for major transformation.”

Recently, the covid pandemic was a catalyst for many people.

“Some people lost their jobs and had to depend on government assistance, while some people went without any access to financial resources. Those who had money or savings fared better than those that did not,” she says. “In the midst of this, they started to question their financial situations, the purpose of money, why they were working and whether they had a work-life-money balance that was worthwhile.”

In other words: People took stock of their financial wellness.

What is financial wellness?

“Financial wellness is establishing a financial structure that creates emotional freedom and eliminates the need to operate from a state of survival and fear about what the future will bring,” Mbagwu says. “Financial wellness creates choices and the ability to enjoy the moment whilst feeling secure about the future.”

Mbagwu would know. Her family struggled to make ends meet during her childhood and sometimes couldn’t. The experience left a lasting impression on her. As a young adult, at various times she was depressed or suicidal. Also: homeless. But it wasn’t for naught. She drew on her hardships to grow a successful executive recruitment business in the U.K., and now helps others looking for guidance.

Your mental and emotional relationship with money can show up in various ways. Here are three problematic patterns Mbagwu has seen in clients, and then helped transform:

The yoyo

Childhood circumstance: Growing up without much money but desperately desiring it

Adult manifestation: A strong work ethic and drive to amass money, followed by loss

“The trap with this pattern is that as soon as people reach their financial goals, they sabotage their success and lose it all, so they can recreate the pattern of striving to acquire it again,” Mbagwu says. ​​”Their subconscious comfort zone is not having enough and feeling the need to work hard to acquire more.”

Perceived scarcity

Childhood circumstance: Growing up in a household where money was a constant concern

Adult manifestation: Persistent need to have more money

“They may remember experiencing and witnessing a constant undercurrent of fear and anxiety in relation to money, so no matter how much they make, they are still not content and are always fearful of not having enough,” Mbagwu says.

The crutch

Childhood circumstance: Growing up receiving gifts and money as rewards or pacifiers

Adult manifestation: Constant need to spend

“This allows them to avoid dealing with difficult emotions,” Mbagwu says.

To truly achieve financial wellness you need to identify your limiting pattern, and then put structures in place that empower you to break your cycle and create a new relationship with money.

6-Step Plan to Find Financial Wellness

Here’s a 6-step plan to help you find financial wellness, courtesy of Mbagwu, who has worked with people of varied life and career backgrounds:

1. Build awareness of your financial patterns.

We’ve all developed habits regarding money. You have to unearth and identify your patterns in order to address them. One way to do this is to ponder the consistent financial results you’ve produced in life, both positive and negative. What concerns you, generally, and how does that show up in relation to your finances?

2. Take stock.

Get clear on where you are now financially by being ruthlessly honest. Scrutinize your daily, weekly, monthly and yearly expenditures. Then consider where you want to be financially, especially in regard to your ideal lifestyle. When you know the gap between where you really are and where you want to be, it’s easier to create a plan to move closer to your financial goals. Are your spending habits moving you toward or away from your goal?

3. Budget.

Now that you have a clear picture of your finances, you can project and plan your future expenditures so that you stay within means that allow you to achieve your goals.

4. Eliminate financial stress.

Identify your areas of financial stress. Prioritize taking action to eliminate these areas of stress. For example, pay off outstanding debts and cancel unnecessary subscriptions.

5. Build cash reserves.

Allocate a portion of your income to savings so you have a cushion for unexpected incidents like losing a job, getting in an accident or living through a life-altering pandemic. Cash reserves also allow you to step out of survival mode and move away from fear.

6. Gain financial knowledge.

Educate yourself about money and how to handle. This empowers you to be more creative about how you reach your financial goals. What types of investments are accessible and suitable for you? How can your money work for you?

Journalist Mitra Malek writes and edits content related to wellness. She’s pretty darn frugal, which she always thought was a good thing, but now she’s not so sure.