What is Financial Wellness and Why is it Important?
Financial wellness is the balance between having enough money to cover recurring expenses, while still saving enough to support yourself down the road—particularly during retirement. Much like physical wellness, financial wellness takes hard work. You can’t expect to run a marathon if you don’t train, just like you can’t expect to have a comfortable retirement if you don’t invest. Employees must understand that investing in personal financial wellness is the key to a secure financial future. Financial wellness education is the first step to achieving their long-term success.
Why is financial wellness important? The road to financial wellness can be tough, but the benefits make it worth it. Consider how scary unexpected expenses are. They make you choose between something you want to buy and something you need to buy. For instance, a car accident may force you to put off a vacation because you need a vehicle to get to work.
Financial wellness reminds you to save often because you never know what unexpected events may be around the corner. If you focus on financial wellness, you have to worry less about hidden costs because you’re already preparing yourself by saving money. Ideally, if you save enough, you’ll have plenty to cover surprise costs and your retirement.
Moreover, financial wellness is important because the majority of Americans cannot pass a financial literacy test, according to a Financial Industry Regulatory Authority (FINRA) study. This study found that many people had trouble calculating interest and putting away money for emergencies. This underscores how badly employees need financial education. It’s one thing to offer financial services like a defined contribution plan, but it’s another to inform employees about financial issues like when to take out a loan.
Check back with us soon as we offer more advice for employers for educating employees on financial wellness!
The information provided in this article is to be used for informational purposes only and is not intended to replace the advice of an insurance professional. If you are interested in learning more, please contact our Employee Benefits Management Group (EBMG) here or by calling (800) 242-4433.