In simple terms, overall wellness can be looked at as a combination of physical, mental and financial wellness. Traditional wellness strategies target physical wellness and in recent years there has also been a growing focus on mental wellbeing. However, the missing piece seems to be financial wellness with only 24% of employers saying they provide any element of this in their overall wellbeing strategies, according to the Employee Benefits/Close Brothers Pensions research 2015, published in November 2015.
Financial wellness is not just the missing piece of many wellness strategies. Without it, there is a likely knock-on effect on mental and potentially physical wellness too, so including it is vital to ensure overall wellbeing.
The 2014 YouGov Barclays wellness study, published in ??, found that 46% of employees worry about their finances with one in 10 losing sleep over it. This level of worry and the impact on essentials such as sleep is likely to have a negative impact on overall health, particularly over the long term.
So what is financial wellbeing? The US is further along the road than the UK in assessing, measuring and tackling financial wellbeing. So borrowing a definition from the US Consumer Financial Protection Bureau from January 2015, wellbeing occurs when: An individual has control over day-to-day or month-to-month finances; they can absorb financial shock; they are on track to achieve their own financial goals; and they have the financial freedom to make the choices they want to enjoy life
Interestingly, under this definition, the scope of financial wellness is extending beyond just subsistence; it includes financial resilience and it ties financial wellbeing to being able to attain the lifestyle they wish to have. This is an important perspective and, after all, embodies what finances represent which is the wherewithal to live the life people choose.
The other important insight this provides is timescale. Financial wellness is not just about immediacy, it also has to work for the short, medium and long term.
Many people considering financial wellbeing focus only on those struggling to manage their money day to day, those with debt problems and those starting out in their career. To assist these groups, employers may offer debt counselling as part of an employee assistance programme, arrange workplace loans and provide budgeting and loan consolidation modellers. However, a financial wellbeing strategy is not just about debt and is definitely not just for the young.
Most people will worry about money at some point in their lives and worries are not only for those that do not have enough money. People worry about what to do with their money, how to make the best decisions to make the most of what they have, where to find the right mortgage, understanding pensions and saving enough for retirement, where to invest, whether investments are working well enough, how to help children through education and onto the property ladder, tax planning, tax returns, worrying about funding a relative’s care needs, protecting their family, surviving and rebuilding following a divorce, changing cars, replacing the boiler, moving house, leaving money for children and grandchildren, and so on.
All of these can easily be addressed and the workplace is a great channel for communication, education, guidance and engagement, as well as employment reward and benefits being the single largest source for many for financing their lifestyle and future financial security.
An inclusive programme of financial education with targeted support, further guidance and access to advice will deliver improved financial wellbeing. But not all education is equal. The most important aspect of a financial education programme when driving wellbeing is that it must cause positive change. Awareness and information on its own will not do this and even inspiring and engaging information will not work effectively if there is no mechanism for employees to implement change. Information, inspiration and implementation are the cornerstones of effective financial education programmes, but these are essential for programmes that aim to improve financial wellbeing.
Xx is xx at Close Brothers Asset Management
