What is Financial Well-Being?

According to this Forbes article, financial wellness programs are now being offered by half of employers. After all, financial health, just like emotional or physical health, should not be ignored.  

Much of a person’s overall financial stress or freedom is due to their personal finance circumstances. If an employee, friend, or any individual is in financial distress, it can change how they feel and act in their daily lives. Constant worry about one’s financial future can have a significant effect on one’s overall well-being. 

Abraham Maslow’s “Hierarchy of Needs” includes “safety” as a second-tier need, just above physiological needs (such as food and breathing). While “safety” can cover many aspects such as health, family, etc, it is logical to consider financial safety as part of this need.  

Moreover, there is a separate “Financial Hierarchy of Needs” that organizes must-have financial safety (such as income) at the bottom, and “nice to haves” (such as investments and presumably financial freedom) at the top.  

Considering employees’ financial lives as an employer is crucial in today’s world. With rising inflation, soaring debt, and other financial challenges, almost one in two Americans say they are struggling financially.  

The Importance of Financial Well-Being 

Let’s dive into the definition of Financial Well-Being 

Financial well-being is an essential part of anyone’s life. While most people wouldn’t say no to some extra money or a life of riches, the reality is that the majority of individuals will be able to live free of financial stress for the most part if the following conditions are met: 

Income Covers Expenses:

the first financial goal is for income needs to cover expenses in order for a household or individual to remain stable and functioning. If income is not enough to cover the necessary costs, then the household or individual will likely fall into debt or experience other hardships. This can be particularly difficult for families with children, as they may need more money to cover expenses like childcare or food. 

No Debt or Stay on Top of Debt:

Debt can quickly spiral out of control, leading to financial ruin. It’s important to have no debt or stay on top of debt to avoid this fate. By being proactive and responsible with finances, people can protect themselves from dire financial situations.  

Have Money for Emergencies:

Emergencies can come up at any time and without warning. Having money saved up can help people handle those emergencies without having to go into massive debt and mental distress, or else lacking the resources to afford adequate care.  

Working Toward Financial Goals:

It’s important to save and work toward long-term financial goals because it allows people to have a better future. Without saving, people may not be able to afford things like a home or a car. And without long-term financial goals, people may not be able to save for retirement or their children’s education. By setting and working toward financial goals, people can improve their overall financial situation and achieve their dreams for the future. 

Freedom:

While most people will never have the money to do whatever they want whenever they want, it’s still important for an individual to feel like they have some degree of freedom in their financial choices.  

Financial Well-Being in the Workforce 

Let’s dive into the definition of Financial Well-Being 

The most recent economic challenges have had a devastating effect on businesses and workers. Employers are now more aware of how financial distress reduces worker productivity, increases absenteeism rates among employees as well as their own health in regards with staying active for work-related reasons. 

Therefore, in order to best support their employees and organization, employers are adopting financial wellness programs as part of their corporate culture.  

How Can Employers Promote Financial Well-Being? 

We always promote employers to adopt authentic employee benefit programs that work for their organizations. While there’s no one-size-fits-all approach to this program, there are some avenues to explore when considering a financial wellness program.  

• Raising Pay 
• Good Health Benefits 
• Flexible Scheduling 
• Paid Family Leave 
• Opportunity for Professional Growth 
• Other Financial Wellness Benefits