The American Psychological Association’s Stress in America 2021 report revealed that 61% of US adults rated money as a significant source of stress. According to the 2021 TIAA Institute-GFLEC Personal Finance Index, 22% of American adults find it difficult to make ends meet in a typical month. 18% report spending 10+ hours a week thinking about and dealing with financial problems.
Whether you’re living the reality of these financial struggles or educating yourself about personal finance, you need to know about financial wellness. Here is a comprehensive look at financial wellness and the myriad ways it affects your life, and what you can start doing to achieve it.
Financial Wellness Defined
The most comprehensive financial wellness definition comes from the US Consumer Financial Protection Bureau (CFPB). They define financial wellness, otherwise known as financial well-being, as “a state wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.”
By this definition, financial wellness is evaluated in four categories: present and future, and security and freedom of choice. Someone who has achieved financial wellness therefore has freedom and security in both the present and the future. This categorization leads to four hallmarks of financial well-being:
- Control over your day-to-day, month-to-month finances (security in the present)
- Capacity to absorb financial shock (security in the future)
- On track to meet your financial goals (freedom in the future)
- Financial freedom to make choices to enjoy life (freedom in the present)
Annuity.org defines financial wellness in broader strokes, simply as “your ability to live a healthy financial life.”
Whether you define it with brevity or in detail, financial wellness denotes a sense of positivity, confidence, and preparedness in your financial life.
The Importance of Financial Well-Being
Financial wellness is not just about your finances. The impact of your financial well-being goes beyond your bank account and affects many aspects of your life. It impacts various facets of your well-being and plays a significant role in your ability to respond to your circumstances. Here are some key areas that highlight the importance of financial wellness.
In the 2021 Workplace Benefits Report, Bank of America found that “46% of employers offer financial wellness programs, up from 40% in 2020.” This is a growing trend among employers, 95% of whom responded that they “feel a sense of responsibility for the financial wellness of their employees.”
Increasing numbers of companies are moving forward with financial wellness programs because of the way financial wellness affects employees’ work life. That same report found that more than 8 in 10 agree that financial wellness results in the following benefits:
- Greater employee productivity
- More engaged employees
- More satisfied employees
- More loyal employees
The Financial Wellness at Work report from the CFPB further demonstrates the impact of financial wellness in the workplace. It notes that “across workers of all generations, 24% admit their personal finances have been a distraction at work. And, of those workers who are concerned about their finances, 39% spend at least three hours each week either thinking about or dealing with financial problems at work.”
Achieving financial wellness can therefore be an important tool for boosting your productivity at work. The benefits will also carry over to other areas of your life, allowing you to be more productive at home and in pursuing your personal goals.
Your financial well-being also has a significant impact on your mental health. If you’re struggling with money problems, you may experience feelings of anxiety, depression, or panic. The Money and Mental Health Policy Institute found the following:
- Half (46%) of people in problem debt also have a mental health problem.
- 86% of respondents to a Money and Mental Health survey of nearly 5,500 people with experience of mental health problems said that their financial situation had made their mental health problems worse.
- Financial difficulty drastically reduces recovery rates for common mental health conditions.
Financial stressors can also derail your sleeping pattern, engender feelings of social isolation, and cause you to forgo essential purchases. For all these reasons, your mental health is negatively affected by financial problems—and greatly improved by financial wellness.
Pursuing Financial Wellness
If you’re looking to boost your financial well-being, start with financial literacy. Learning about financial concepts and best practices is the best way to work toward financial freedom and security in your life.
When you’re ready to start taking action to attain financial wellness, consider purchasing our UA Abundance Packages. UA Abundance Packages are similar to annuities—you pay a lump sum up front, then begin to receive payments in the future. They also offer additional benefits, like contributing funds to UA Legacy Grants to help individual grant recipients, charities, and more. These Abundance Packages can be a great way for you to achieve financial wellness and have financial security in the future.
For other actions you can take, remember that your employer may offer financial wellness programs, so it’s a great idea to check with them. Finally, Annuity.org offers these seven steps toward financial wellness:
- Track your income and expenses
- Create a budget
- Build an emergency fund
- Protect your assets
- Reduce or eliminate debt
- Save and invest
- Plan for retirement or other long-term goals
Depending on your situation, financial wellness may seem like a lofty goal, but know that it is attainable. Steady education and progress will get you a long way, and there are many resources available to help you, including us at UA Legacy Grants.
At UA Legacy Grants, our mission is to empower over 1 million individuals with the tools needed to increase financial literacy and the ability to create financial abundance for their families. Our UA Abundance Packages help individuals and organizations to reach their financial goals, like making college more affordable for students or creating passive income in retirement, through our Purchase With Purpose program.
Between grant donors and contributions from our “for profit” sister company, Universal Achievers, we are able to provide granted financial wellness packages to those in need. Find out how you can learn more about what we do or purchase your own UA Abundance Package today!