Financial Well-Being

Many individuals get a sense of financial security from simply paying their bills each month, and having a modest amount tucked away in savings for a rainy day. 

But what if they could not only pay their bills, cover rent and groceries, and contribute to future nest-eggs, but also freely make spending and investment choices that help them cultivate their ideal daily and future lives? 

When we achieve this state of monetary flexibility and freedom, we are able to enjoy a concept called financial wellness and well-being. 

What is financial well-being?

Critically, financial well-being generally describes a sense of comfort, stability, and control over one’s personal finances, both in the long and short term. A person’s finances can have a palpable impact on both their physical and mental health, and so the definition of financial well-being can expand to incorporate both of these elements as well. 

Financial well-being vs. financial health

The concepts of financial well-being and financial health are not mutually exclusive. In fact there exists significant overlap between the two, however there are also a number of important differences especially in how they can be applied to give you an understanding of your current financial situation. 

Financial well-being describes a general state of financial wellness and comfort. When we experience financial wellness, we also experience good financial health. 

Financial health may be applied more broadly to describe an individual’s financial state, whether they experience that state as positive and “healthy” or negative and “unhealthy.” As a term, financial health can be used in the same way we apply “physical health,” where it may be good, poor, worsening, or improving. 

Financial well-being vs. financial literacy

Financial well-being can encompass financial literacy. Although one does not necessarily need to be financially literate to experience financial wellness, it can be a helpful factor in cultivation of the latter. 

To have financial literacy means to have an understanding of smart money management techniques including budgeting, saving, investment, tax navigation, and even better spending habits of the day-to-day. Financial literacy may be bolstered by access to tools and resources which help you to better track and strategize your finances. 

Having financial literacy can help to cultivate financial wellness as with it you are better equipped to make smarter choices with your money which help you to build towards the financial future you want to manifest. 

Why is financial well-being important

Financial insecurity is one of the main stressors experienced by American adults today, and can have a serious impact on both the mental and physical health of sufferers. This fact often serves to perpetuate further monetary instability as individuals miss work due to health concerns or burnout. But cultivating financial wellness can directly help to mitigate some of these problems.

At the individual level, financial well-being allows people the flexibility and freedom to make lifestyle choices that better suit their wants and needs, as well as that of their families. Having financial wellness also means people are able to save to support themselves post-retirement, create nest-eggs for dependents, and grow their money through investments. It also means they may experience emergency bills and expenditure without the risk of financial hardship.

At the corporate level, employee financial well-being includes such business advantages as improved retention, better workplace performance and productivity, and reduced expenditure on workforce healthcare and expenses related to absenteeism.

Financial well-being stats

  • ¼ of all American adults report feeling extreme financial stress, which has been linked to the development of health problems and unhealthy behaviors including smoking and drug use.

  • As of 2014, 37% of employees had missed at least one day of work to address financial emergencies.

  • When organizations provide cost-of-living raises to their employees, they enjoy a workforce which is 15% more engaged.

  • When organizations go beyond benefits and invest in the financial well-being of their people, workers may be 38% more engaged.

  • 93% of employees have expressed a desire to receive support towards financial wellness from their employer.

  • 71% of employees engage their workplace’s financial wellness benefits to cultivate financial well-being for themselves and their families.

What are the elements of financial well-being?

The practical aspects of financial wellness may look different to different people across a variety of backgrounds and income levels, however the four key components, according to the Consumer Financial Protection Bureau, include:

  • The ability to comfortably cover emergency expenses if and when they arise at any point in the future.
  • The ability to comfortably cover all necessary expenses of the day-to-day.
  • The ability to make spending decisions which support your ideal or desired lifestyle.
  • The ability to comfortably save and invest to support long-term financial objectives. 

More specific elements also include debt elimination, a flush retirement account, and ability to comfortably support the long-term financial goals of dependents. 

How can employers help employees with financial well-being?

There are two steps to achieving financial wellness with which employers may support their workforce:

  1. Reaching a state of financial stability.
  2. Building financial well-being. 

By providing a cost-of-living adjusted wage which allows employees to thrive beyond the responsibilities of their daily expenses, as well as filling out their benefits portfolio with supportive advantages, businesses may give employees the tools they need to climb both steps. 

Eliminating debt is one of the top financial goals of adults today, and this should be one of the benefits your organization provides. Whether that’s loan support, repayment matching, or other programming, debt elimination is often the first and most significant step workers can take towards future financial wellness. 

Related to this are tuition and educational benefits which allow employees to reach greater professional heights without the need to solicit predatory loans which make up a significant percentage of national debt today.

Finance-related health problems may also be exacerbated if your health plan is too expensive for employees to access when they need it. Take a look at your current health benefits and prepare to adjust them to make them more accessible to your workforce. This will benefit your business, as well as the health and financial well-being of your workers. 

Finally, empower your employees to build the financial futures they want for themselves with tools and resources for financial wellbeing. Origin is a comprehensive financial wellness solution that provides implements for better tracking and money management, educational resources for financial literacy, and access to financial counselors who provide personal advice and guidance to get your employees on-track towards better money management. 

Visit us today to learn what else Origin can offer your business.


How financial wellness can help your DEI strategy

Download now