What is financial wellness, and what does it mean for your life? Most people understand that they have to budget, save and prepare for the future, but they aren't always sure how to put it all together to achieve a state of overall financial well-being. Being "well" financially is the total picture of your financial health, including how your financial situation affects your stress levels and overall mental and physical health. Financial wellness is not a destination, but a constant journey of making adjustments and building resilience to maintain financial equilibrium, not only to pay your bills but also to enjoy a more stable, healthy and successful life.
If you're feeling stressed about your finances, you're not alone. According to Prudential's recent report on The State of Financial Wellness in America PDF opens in new window, 57% of employees say that they are "very or somewhat stressed" about their financial situation. Many of these people are struggling to pay their monthly bills, lack sufficient emergency savings, are not on track for long-term savings goals such as retirement, and are exposed to significant financial risks such as premature death or disability.
Financial wellness is mostly self-directed and unique to your goals and where you are in life, but depending on which aspects you need help with, there are a variety of tools and guidance available that can help you dramatically improve your financial standing.
Prudential has identified three universal pillars of financial wellness that can help anyone improve their financial well-being:
- Managing Day-to-Day Finances: The first pillar of wellness is learning to manage your budget, understanding your credit score and building short-term emergency savings so you can better handle life's day-to-day ups and downs.
- Setting and Achieving Financial Goals: Do you know how much you have saved for retirement and how much retirement income you'll likely have? If you're not saving enough, do you have a plan to get there? Are you taking advantage of employer-sponsored retirement plans? While retirement is just one example of many, setting and making progress toward short- and long-term financial goals are a big part of achieving overall financial wellness.
- Protecting Against Risk: The final pillar of financial wellness is protecting yourself against serious financial disruptions and setbacks. Having the resources to navigate and manage financial challenges, such as a serious illness or injury, or the premature death of a spouse or breadwinner, is a major component of a financially secure life.
People who are financially well can comfortably pay their bills, manage their monthly expenses without living paycheck to paycheck and conserve money for emergencies. They can also save for long-term goals and feel confident about their future in retirement. They're resilient in the face of financial setbacks because they have the right resources and strategies in place.
Are you ready to join the ranks of the financially well? Learn more about the pillars of financial wellness and how to build the right strategies for your financial journey.