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The Key to happiness? Boosting your financial IQ

You’ve likely heard the saying that ‘money can’t buy happiness’. And while there is some truth to this adage, multiple studies across the world have shown that there is a strong link between being financially literate and experiencing more life satisfaction and happiness. Despite the strides that women have made in the workforce, many of us still struggle with financial literacy and confidence, this leads to feelings of stress, anxiety and even shame. But what if I told you that mastering the basics of personal finance could be the key to unlocking your best life? By understanding how to manage your money effectively and plan for your future, you can gain a greater sense of control over your life and experience increased peace of mind. So if you’re ready to level up your money game and take control of your financial wellbeing, read on!

In its essence, being financially literate means having the knowledge and skills to make both informed and effective decisions regarding your personal finances. If you understand concepts like budgeting, saving, investing, managing debt and financial planning then chances are you’ve got a good level of financial literacy. So how does this improve your feelings of happiness?

  1. Less Financial Stress: Financial literacy helps you to better manage your money, make informed decisions, and avoid financial pitfalls. This, in turn, can help reduce financial stress and anxiety, which can have a negative impact on your mental health and overall happiness.
  2. More Financial Security: When you have a good understanding of personal finance, you are more likely to engage in behaviours that contribute to financial security, such as saving for long term goals like home ownership, education and retirement, building an emergency fund, and avoiding high interest debt. This level of financial security can provide peace of mind and contribute to overall happiness.
  3. It’s Empowering: Financial literacy can give you a sense of control over your finances and empower you to make decisions that align with your values and goals. Got a troublesome housemate? No worries, you can afford to move out and find your own place. Want to volunteer and travel abroad for a year? Great - you’ve got the money saved! The outcome? Greater fulfilment and happiness.
  4. It Improves your Relationships: Financial conflicts are a common source of stress in relationships. When you (and, ideally, your partner) are financially literate, you are better equipped to communicate about money matters, leading to less conflict and greater relationship satisfaction.

Alarmingly, levels of financial literacy have regressed in recent years according to the latest Household, Income, and Labour Dynamics in Australia (HILDA) survey results particularly amongst women. The good news is that you don’t need to be a genius to understand your money. You just need to be curious and committed to learning! 

  1. Start with the basics:
    Begin by learning the fundamentals of personal finance, such as budgeting, saving, and managing debt. The MoneySmart website, run by the Australian Securities and Investments Commission (ASIC), is an excellent resource that offers a range of tools and information to help individuals improve their financial literacy. They even have a guide on how to financially prepare to buy a puppy! The best bit, it’s run by the government so no one is trying to sell you anything. 
  2. Read books and listen to podcasts:
    There are many excellent books, blogs and podcasts on personal finance that can help you improve your knowledge and skills. Here’s a few favourites:
    1. Finance Books: Barefoot Investor by Scott Pape, Mindful Money by Canna Campbell, Girls Just Wanna have Funds by Molly Benjamin.
    2. Australian personal finance blogs include Money Magazine, Barefoot Investor, and My Millennial Money. 
    3. Money Podcasts include She’s On the Money, Small Change,The Pineapple Project, Fireplay, Financial Feminist and Money Please.
  3. Attend financial literacy classes and workshops: Many community organisations and financial institutions offer free or low-cost financial literacy classes and workshops. Check out local community centres or libraries, or contact your bank to see if they offer any financial literacy programs. Otherwise there are private organisations like SkilledSmart, Rask Media and the Greenhouse that run online financial literacy courses.
  4. Use financial tools and apps: There are many financial tools and apps available that can help you manage your money, track your spending, and set financial goals. Some popular options include WeMoney, Frollo, MoneyBrilliant, YNAB, MoneySmartCars and Splitwise.
  5. Seek advice from financial professionals: Put the experts to work! Who you should talk to will vary depending on what you’re doing but experts that you may want to consult include financial planners, money coaches, mortgage brokers, insurance brokers, lawyers and accountants.
  6. Stay informed: Keep up-to-date with financial news and developments by reading reputable news sources and staying informed about changes to laws and regulations that may impact your finances. Some of our favourites include the Australian Financial Review (AFR) and Money Magazine.

Working on improving your financial literacy is a wonderful act of self care. Why? Because of the profound impact it has on your overall wellbeing and quality of life. It leads to better financial decisions, more prosperous financial outcomes, greater security and more agency in your life.

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