About half of Americans believe they are unprepared for a sudden financial need such as the purchase of a new car, appliance or furniture or a significant home repair, according to Gallup Daily tracking survey through 2015.1
So how can we get financially fit? How do we find balance between spending and saving – between living in the present and saving for life’s unexpected financial needs? And why is this important?
First let’s define financial wellbeing – it is defined as a state of being wherein you:2
- Have control over day-to-day, month-to-month finances;
- Have the capacity to absorb a financial shock;
- Are on track to meet your financial goals; and
- Have the financial freedom to make the choices that allow you to enjoy life.
Organizations that don’t implement financial wellbeing into their wellness programs are missing the mark. In a survey conducted by the American Psychological Association, money is a somewhat or significant source of stress for 64% of Americans but especially for parents of children below the age of 18 and younger adults (77% of parents, 75% of millennials, ages 18 to 35, and 76% of Gen Xers, ages 36 to 49).3
The added financial stress has a significant impact on many Americans’ lives.
“Some are putting their health care needs on hold because of financial concerns. Nearly 1 in 5 Americans say that they have either considered skipping (9 percent) or skipped (12 percent) going to a doctor when they needed health care because of financial concerns.”3
Many adults are coping with health and lifestyle challenges and are beginning to recognize the connection between stress and physical and mental health.
- Money and work remain the top two sources of very/somewhat significant stress, but in 2015, for the first time, family responsibilities emerged as the third most common stressor (54 percent).
- The majority of adults report having at least one chronic illness (67 percent). In addition, many adults lack exercise and remain sedentary for much of the day. More than 10 percent of adults also report having a mental health-related diagnosis (13 percent for anxiety disorder and 16 percent for depression).
- About two in five adults (39 percent) report overeating or eating unhealthy foods in the past month due to stress, compared to 33 percent in 2014.
- Adults in urban areas have a significantly higher reported stress level on average than those in suburban and rural settings (urban: 5.6 on a 10-point scale, vs. 5.0 for suburban and 4.7 for rural).
- Almost one-third of adults report that stress has a very strong or strong impact on their body/physical health and mental health (31 and 32 percent in 2015, compared to 25 and 28 percent in 2014, respectively).4
To help employees improve their financial fitness, organizations should provide financial education, programs, and other content into their wellness programs.
Here are 6 ways employees can improve their financial wellbeing:
- Make a simple plan to monitor and track your spending habits and to gain control over your financial decision making.
- Have a budget and stick to it. Set short-term and long-term goals to provide structure for your financial decision making. For example, set a spending budget for the holidays. More stuff doesn’t mean less stress.
- Spend some time researching before making major financial decisions to ensure you make the most-informed financial decisions.
- Get smart about money – Use free educational resources available at http://www.consumerfinance.gov.
- Don’t compare yourself to others. Compare yourself to your own standards. Don’t purchase things to keep up with the Joneses. Instead think about long-term impacts of every purchase.
- Avoid impulse shopping. Keep your spending under control by stopping to think about whether you need that purchase or postpone the purchase to a later date if you can.
- Gallup, Inc. “Half of Americans Unprepared for Sudden Financial Need.” http://www.gallup.com/poll/188009/half-americans-unprepared-sudden-financial-need.aspx?g_source=FINANCIAL_WELLBEING&g_medium=topic&g_campaign=tiles
- Consumer Financial Protection Bureau “Financial well-being: The goal of financial education.” January 2015: http://files.consumerfinance.gov/f/201501_cfpb_report_financial-well-being.pdf
- American Psychological Association. “Money Stress Weighs on Americans’ Health” 2015, Vol. 46, No.4 http://www.apa.org/monitor/2015/04/money-stress.aspx