Is Financial Wellness a Lifetime Commitment?
Did you know your financial wellness is closely tied to your physical and emotional well-being?
Being worried about money is a huge stressor that can impact your health. It can also make you less engaged at work – in Manulife’s recent Financial Wellness Survey, 70% of the respondents say that they worry about their finances often or sometimes, and 33% said it distracts them at work.
Poor financial health doesn’t just impact your mental health. It can be hard on you physically, too. it may keep you from visiting your dentist, from updating your glasses, and from having physiotherapy. And those type of unaddressed health concerns can impact productivity; it’s harder to bring your full self to work if you’re in pain or discomfort all day long.
What is financial wellness, exactly?
It’s not about how much money you have. It’s possible that you have a high income AND be financially unhealthy. it doesn’t matter how much you make – if you aren’t planning for your future or you’re constantly worried and anxious about money, your financial wellness needs work.
So, how do you boost your financial health?
Fifty percent of respondents under 25 said they weren’t saving. But, it’s never too late to start. Becoming adept at managing your money is a learned skill; getting a good understanding of savings, investing and insurance will give you the knowledge you need for a lifetime of financial wellness. And starting early will get you ahead faster.
According to Forbes, if someone invests $5000 a year from ages 25 to 40 at a 5% rate of returns, they will have $130,000 more at 65 than if they started at 40.
Be prepared for the unexpected
Your financial wellness is only as good if it can weather a storm (like a job loss or a divorce). Survey respondents with high financial wellness were more likely to be prepared in case of death, serious illness or disability.
Thirty-two percent of men and 50% of women said the had “beginner” level financial knowledge, and 66% of men and 74% of women said they would like to feel more confident making financial decisions.
Everyone can benefit from improving their financial know-how. Do your research. Learn what’s out there. Ask friends about their strategies. And talk to an advisor about the best options for your situation.
Make retirement a priority
Only 19% of people surveyed said they were meeting their retirement goals, and 44% said they did not know if they are on track. Those are some sobering statistics. Saving for your post-work years is vital for your financial health – and your personal wellness. Not only sit is stressful knowing your finances aren’t where they should be, but you may have to work longer than you intended, which can also impact your health.
“The real measure of your wealth is how much you’d be worth if you lost all your money.” Anonymous
The greater the financial wellness of our respondents, the more likely they were to be working toward long-term financial goals. Participants who scored low were more focused on short-term savings and paying a debt.
While it is important to pay down debt, it’s also vital to understand the difference between good and bad debt (mortgage vs credit card, for example), and balance long-term savings with short-term goals.
Talk to an advisor
You don’t have to have a high net worth to benefit from an advisor’s knowledge. Survey respondents who have an advisor are overwhelmingly in better financial shape than those who manage their own finances.
The study also found a connection between do-it-yourself investors and low financial wellness, which just underscores the benefit of getting professional help.
How to tell if your financial program is succeeding
Wellness is a buzzword in the benefits world, and most companies have a financial wellness benefit in place now or plan to offer one soon. The idea of helping employees with their own money is popular, but many companies are still searching for a clear sense of what financial wellness means.
For your financial wellness program to be truly beneficial to your company, you’ll need stated goals about what you want to accomplish as well as ways to measure how good a job the program is doing in hitting those goals.
Financial wellness means behavior change
All companies need a financial wellness program with enough participation to justify the investment while also meeting its employees’ needs for personal finance and retirement education. What does that look like for your company?
Considering the awful state if personal finance worldwide, it’s likely you will need to begin by helping your employees lay a solid foundation with their basic money habits. That will mean inspiring change in areas like budgeting, debt and emergency savings.
Setting goals and measuring progress
Getting your employees the best financial wellness information available is great, but it’s essential that you find out how much impact it’s making in their lives.
Think of it this way: Getting to the gym is easy, but unless you’re doing weigh-ins, you have no idea whether or not you’re moving toward your weight-loss goals.
As bis as financial wellness benefits are becoming, many companies still have no success metrics in place. You’ll definitely need a program that allows you to get reports and data about not only participation but also on-going progress with individual goals.
These are the key success metrics you’ll want to track to ensure the program is reaching deep and getting big outcomes:
- Participation – The number of employees signing up for the program is a good indication of need, and if participation grows and stays high you’ll have a good sense of how well it’s working.
- Engagement – A great program should be personalized to wherever employees find themselves while pursuing financial wellness. Online platforms allow convenient access to materials and let you easily track progress.
- The total amount of debt paid off and money saved –
It helps both your employees and you to see this number grow over time. It’s encouraging to see the debt vanishing and the savings growing. This is also a real measure your company can use to find out how much behavior is really changing company-wide.