The phrase ‘financial wellness’ is thrown around a lot in the financial industry, but the term is commonly misunderstood.

Some people only associate financial wellness with how much one has in their bank account, and this interpretation misses the point: that financial wellness is both objective and subjective.

It’s not just about how much money a person earns. It’s also about their lifestyle choices, how they manage their money, and how they feel about their money situation.

Most financial wellness resources focus on what a person should be doing with their money to improve their wellness (Margaret Giles and Christine Benz have some great content on this!).

And while this guidance is important, it’s also key to understand the role that our mindset and psychology can play on our behaviors and our financial wellness as a whole.

Tips to follow through on good financial behaviours

Let’s focus on how our minds can work against us when we try to practice behaviours that can improve our financial wellness. For example, though most of us have an idea of what we should be doing to improve our objective financial wellness, many of us struggle to follow through on these actions.

There are plenty of reasons for the gap between knowing what we should do and actually doing it. To help close this gap, we can turn to research for a few tips and tricks.

Just get started, even with a small action.

In our latest research, we examined the idea that the relationship between financial wellness and financial behaviors goes both ways. That is, financial wellness informs good financial behaviours, but good financial behaviors also inform financial wellness.

For example, someone who has followed through with a positive financial behaviour—like paying off their credit card debt—may feel better about their overall financial situation. In turn, this positive feeling may compel the person to practice other good financial behaviours.

What does this mean? The key to following through on your financial goals may be to just get started, even if it’s with a small action.

Say your goal is to get started investing. For a first-time investor, this may seem like a monumental task and therefore one that continues to get pushed off.

So, instead of trying to ‘get started investing’ in one day, this investor may be better served by starting with one small action. Maybe they aim to set up automated savings or choose a particular investment account to open.

Completing this small action may be the encouragement the investor needs to continue making progress. Also, as an added benefit, many may be pleasantly surprised by the additive power of small actions. For example, consider how saving $5.00 a day adds up to about $150 a month.

Stay committed by setting a date.

If you still find yourself thinking that it can’t be that easy to ‘just get started,’ then try setting a date and time to do so.

Open the calendar app on your phone, find a free hour on your schedule, and reserve that time for your financial wellness. You can use this hour to read up on personal finance, create a plan that breaks down a big personal finance goal into manageable bite-sized tasks, or take action on an existing plan.

Having a set appointment may help you follow through because the time required to take action is already reserved on your schedule.

Build confidence by flipping the script

When it comes to behaviour change, self-efficacy—or the confidence a person has about their ability to succeed in their desired goal—is paramount.

Research by Eskreis-Winkler et al. found a clever way to increase a person’s confidence: Have them provide advice. According to their research, giving advice prompted goal-seekers to feel more motivated, resulting in better outcomes. It’s difficult to pinpoint the exact mechanism at play here, but the researchers believe that goal-seekers may be encouraged to take their own advice because it would feel hypocritical if they didn’t.

To mirror this finding in your personal finances, try asking yourself: ‘If a loved one was struggling with this financial issue, what advice would I offer?’

And actually take the suggestions you come up with. The advice you provide may also be the advice you need to make progress toward your own financial wellness.

Wrapping up

Financial wellness is a complex topic that we plan on continuing to investigate at Morningstar.

Although there is plenty to discover on this front, one thing is certain: There are plenty of levers at our disposal to improve our financial wellness.

Since financial wellness is not just income-dependent, it is not reserved for the uber-wealthy. In fact, all the tactics discussed here that can help people follow through on financial wellness behaviors—and thus improve their financial wellness—don’t require a huge paycheck.

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More behavioural finance resources from Morningstar:

The key to being happy with your finances: New research from Morningstar’s behavioural research team looks into how to really achieve financial wellness.

A deep dive into the psychology of investing: In this episode of Investing Compass, we run through the common behavioural mistakes that will likely have an outsized impact on your portfolio, and how investors can prevent making these mistakes.

Does money buy happiness?: Yes - and it’s crucial to properly defining your goals.

Market returns are secondary to this return driver: Want to be a successful investor? You’re focusing on the wrong thing.

3 steps to save money when you’re tempted to spend

How to stick to your savings goals for the long term.