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Financial Wellness

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Saving money for the things we want is a well-understood concept. If you want to buy a TV or go on vacation, you’ll have to save up for it. Simply put, you can’t expect future expenses to pay for themselves. 

Yet, despite this basic idea, people are still not saving for the really important expenses—emergencies and retirement. It’s easy to abstain from buying coffee for a month so you can afford new shoes, but it’s harder when the end goal is so far off. Many people believe Social Security will be enough to cover them during retirement, so they don’t buy into their retirement plans. In fact, only 54 percent of workers are earning retirement benefits at work, according to the Department of Labor (DOL).

Besides the fact that Social Security only provides minor financial protection, not investing in your future can leave you vulnerable when emergencies hit before retirement age. Right now, would you be able to scrape together $2,000 in a month for an emergency? Many people couldn’t.

This financial uncertainty leads to stress and all the negative effects that come with it, like absenteeism, health complications and mental fatigue. Employee financial instability affects workplace performance. Imagine trying to focus on work when you don’t know how you’ll make your monthly car payment, or how productive you’d be if you had a pile of bills waiting at home. These situations illustrate the impact financial wellness can have on job performance and overall well-being. When you feel secure, you perform better in every aspect of life.

This toolkit is designed to inform you and your employees about the importance of financial wellness. The materials below help answer important questions like how to start saving, how to understand retirement plans and how to stay out of debt. Together, we can help your employees maximize their retirement benefits and enjoy a more stable financial future. 

What is Financial Wellness? 

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. Use the resources in this toolkit to stress this message to employees. Financial wellness education is the first step to achieving their long-term success. 

Why Financial Wellness is 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. The FINRA 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. 

Keep reading to learn how your educate your employees on the importance of financial wellness. 

Read 782 times Last modified on Wednesday, 31 January 2024 22:11
Kristen Russell

Kristen founded Fall River Employee Benefits as the culmination of her insurance industry career as an actuary, underwriting executive & consultant. As an Assistant Vice President at Great-West Healthcare (now part of CIGNA), she managed a $1 Billion block of health insurance. She also worked as a Senior Consultant at Reden & Anders, consulting to insurance companies and large employers throughout the country. Ms. Russell received a Bachelor of Science, Business Administration in Actuarial Science, is a member of the American Academy of Actuaries and achieved Fellowship in the Society of Actuaries through a rigorous nine-year series of exams.

Kristen grew up in Iowa but has lived in Colorado since 1993, currently living near our office in the Lower Highlands neighborhood near downtown Denver.  She enjoys bicycling, hiking, traveling and has a special passion for non-profit volunteering. She is married to an incredibly talented photojournalist, has two adult stepdaughters and an adorable Border Collie/Lab mix named Chaco.

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