Financial Wellness

Financial wellness – sometimes referred to as financial well-being – means the ability to have a healthy financial life.

It is being in a situation where you control your day-to-day or month-to-month finances while having the freedom and security to deal with financial emergencies and still stay on track to meet your long-term financial goals.

The U.S. Consumer Financial Protection Bureau (CFPB) identifies four elements that define financial wellness or well-being.

Financial wellness depends heavily on changing your behavior to improve your financial life.

In most cases, the first steps require you to stabilize your day-to-day financial situation to create a solid foundation on which you can build a financial future.

Financial wellness allows you to focus less on day-to-day money worries, which is a critical step toward creating a successful and sustainable retirement planning strategy.

You can find financial wellness programs within your workplace, professional financial services companies or non-profit organizations.

Financial wellness is different from financial literacy.

Financial wellness describes the state of your financial health. It also describes the way your finances affect your physical, mental and social health.

About 125 million Americans – 54 percent – say they live paycheck-to-paycheck. That includes 40 percent of people making more than $100,000 a year, according to a 2021 survey by LendingClub Bank.

Anywhere from 12 to 33 percent report trouble paying their bills.

This cycle can make it difficult to understand your current financial situation and make it seemingly impossible to make any long-term financial plans. It also takes a toll on your mental, emotional and physical health.

Your financial wellness goals can be very personal and likely change as your priorities change, and you age toward retirement.

Talking with a professional, licensed financial advisor – especially one who specializes in financial wellness – can help get you started.

You may be able to access financial wellness resources through your job.

The number of employer-sponsored financial wellness programs increased in the 2010s. By 2019, 53 percent of companies offered financial wellness programs, compared to just 24 percent four years earlier, according to a survey by Bank of America.

Also, more employers now believe they have an “extreme responsibility” for their employees’ financial wellness – more than a four-fold increase between 2013 and 2020.

Employers are partly driven toward improving workers’ financial wellness because it also improves their bottom line.
Other surveys suggest that financial stress makes workers less productive.

At the same time that businesses are expanding access to financial wellness programs, the number of individual workers who rate their own financial wellness as good or excellent is declining.

Ask your human resources department or Employee Assistance Program (EAP) about financial wellness resources that may be available to you. If your company doesn’t offer a financial wellness program, ask it to consider adding one. Companies are increasingly seeing a business benefit in the idea.