Financial wellness has become a buzzword in recent years, with employers and financial institutions alike touting its benefits. We certainly agree financial wellness is important and beneficial, but it’s crucial to understand that financial wellness is not just about retirement savings, investment coaching, or traditional financial planning. In reality, financial wellness should encompass a broader spectrum of tools and knowledge that empower individuals to navigate the complex world of finance successfully. Unfortunately, some financial wellness options fall short, and as the industry grows, it’s important to meet employee’s needs beyond the traditional confines of a 401(k) plan or financial coaching.
The Inflation Conundrum
One of the biggest challenges to achieving financial wellness today is the relentless impact of inflation. Inflation erodes the purchasing power of your money over time, making your dollars worth less as prices for goods and services rise. While a well-funded retirement account is essential, it is not sufficient to address the issue of inflation. A robust financial wellness program should equip participants with strategies to combat the rising cost of living.
These strategies might include diversifying investments to include assets that historically outperform inflation, such as stocks or real estate. It also takes a practical stance in supporting users cooking on a budget, discounts and coupon codes to reduce the costs of items you are already purchasing, and education about things such as inflation-adjusted financial products like Treasury Inflation-Protected Securities (TIPS) and strategies like cost-of-living adjustments (COLAs) that can help protect their income in retirement.
Getting a Handle on Spending
Financial wellness isn’t just about accumulating wealth; it’s also about managing it wisely. Unfortunately, many individuals struggle with their spending habits, leading to financial stress. A well-rounded financial wellness benefit should focus on helping participants create and maintain budgets, identify unnecessary expenses, and develop responsible spending habits. Without this foundation, even substantial retirement savings may not provide the security individuals need to navigate an uncertain financial future.
Making Dollars Work for You
Having money in your bank account is one thing; making it work for you is another. An effective financial wellness program should educate participants on various investment options and strategies. It should guide them on how to make informed decisions to grow their wealth over time. Investing wisely can help offset the impact of inflation and build a more secure financial future.
Tips and Tricks for Everyday Financial Success
The true essence of financial wellness lies in the small but impactful steps individuals can take in their daily lives to improve their financial well-being. This includes learning practical tips and tricks for saving money, managing debt, and making smart financial choices. From meal planning and coupon clipping to understanding credit scores and refinancing loans, these everyday strategies can collectively make a significant difference in one’s financial health.
The Cumulative Effect
It’s important to recognize that financial wellness is not a one-size-fits-all concept. Instead, it’s the cumulative effect of various components working together to create a financially secure and stress-free life. A 401(k) plan and investment coaching are valuable components of financial wellness, but they are just pieces of a much larger puzzle. True financial wellness encompasses a holistic approach that addresses both short-term and long-term financial needs.
Although many different approaches are called “financial wellness” today, it’s important to provide resources that meet users in a practical and valuable stance, providing short-term wins to their bank account now and long-term wins to set them up for success even after retirement.