Financial Wellness

Financial wellness is the ability to have a healthy financial life and an absence of money-related stress. It results from successful money management practices and has been linked to improvement in an individual's physical and mental status.

Components of financial wellness include, but are not limited to, having steady income, being able to pay debts, having ample emergency funds, and setting money aside for retirement or children's college tuition.

Private and public financial wellness programs have increased in volume over the past ten years, with a Bank of America survey showing more than 50% of employers offer a money management program, compared to 24% in 2005. Financial wellness has become emphasized enough by employers that flexible earned wage access (FEWA) is expected to increase by 20% by 2023.

Financial wellness is a significant goal and obstacle for workers and people in general. Twenty four percent of Americans have fallen behind in paying their bills, including 9% who have missed a mortgage or rent payment.

One in five households (19%) has debt related to healthcare costs, and for those without emergency savings that number rises to 26%. Sixty one percent of Americans report believing it is getting harder to “keep up with my financial obligations, despite having a job.”

Employees rank advice from a professional as their top priority when choosing a financial wellness program, showing that direct counseling from financial professionals is important to them.

Men fare better statistically with retirement savings, with a median retirement savings of $100,000 compared to $30,000 for women. This contributes to reports stating only 43% of women feel financial well compared to 65% of men.

There is a long list of benefits associated with financial wellness, with those who claim to feel financially 'well' reporting they feel capable of managing day-to-day finance, paying bills while saving for future goals, and having retirement savings on track.

Overall financial health can also directly contribute to physical health, with 35% of Americans reporting they lose sleep due to financial stress in a 2020 study by ThrivingWallet.

Financial wellness programs should offer holistic support and advice to employees so they can meet short-term needs, while working toward long-range goals. Each employee has different financial priorities, goals, and requirements, so a successful wellness program requires solutions that are tailored to each employee's unique circumstances.

Employers feel the effects of their staff's financial health as well. Employees in stressful financial circumstances are less productive and less likely to remain at their jobs. Pat Milligan, Senior Partner at Mercer, found that 22% of employees report missing at least one day off work to handle financial problems. Fifteen percent reported spending at least twenty hours a month working on personal financial tasks at work, and 20% have had to resign due to financial stress.

Financial wellness benefits can also help businesses attract and retain top-notch staff, because financially content employees are more likely to stay with companies longer. Once financial wellness is near, both employees and employers have a role to play in its continued progress.

There is a wide range of companies, programs, and services aimed at helping financial wellness. These entities and tools range in who they target (employee, employer, individual), the service they provide (retirement planning, on-demand payments, financial advice, etc.), and their pricing (free, paid, SaaS, freemium).

A number of companies produce a full list of financial wellness services on their platform, with others offering single tools to help distinct issues that people face while handling finances.