Have you ever stressed about your finances? Have you worried that there’s not enough money in the bank to pay bills? Or felt like you didn’t have an idea how to pay for your child’s college education? Or simply couldn’t figure out how to retire comfortably?
If so, you’re definitely not alone. According to data from Gallup, 43 percent of American workers, if they lost their job, couldn’t go more than one month without experiencing significant financial hardship. More than a quarter (28 percent) don’t feel they currently have enough money to live comfortably. Nearly one in four (39 percent) say saving for the future just isn’t a realistic goal for them.
People at all income levels are struggling financially, with wide-ranging impact. They may not be sleeping at night, exercising or eating right, or quitting smoking even though they know they should. They may be delaying necessary medical treatment, as 30 percent of Americans have done, according to Gallup.
As a result, low financial well-being can all negatively affect the four other elements of well-being: purpose, social, community and physical. Individuals with low financial well-being are at greater risk for cardiovascular disease, depression and substance abuse, and have a lower sense of self-worth. They’re likely to restrict activity with friends and family, and reduce their involvement in their communities. In fact, this epidemic of financial distress has been dubbed the “Quiet Emergency in Healthcare” by Forbes.
The impact of poor financial well-being isn’t just limited to individuals. Employers can see higher rates of absenteeism, less on-the-job productivity, and increased health costs from their employees who are struggling financially. Low financial well-being can also impede adoption of employee wellness programs. For example, someone who is living under a mountain of credit card debt probably isn’t making losing weight a top priority. Yet, less than half of large U.S. companies have, or plan on having, a financial wellness strategy in place over the next two years and only 22 percent offer any education around debt management and budgeting to their employees. Poor financial well-being can drive up healthcare usage, creating additional costs for health plans and health systems as well.
At Healthways’ 2014 Well-Being Summit, Andres Gutierrez from the Dave Ramsey organization spoke on the issue of low financial well-being and what can be done to address it. He asserted that one reason for this crisis is ignorance – people simply don’t know enough about personal finance. This isn’t necessarily their fault; the financial services industry refuses to use “straight talk” and real language to better explain its products and services. Little wonder, then, that people make bad decisions when it comes to their money, according to Gutierrez – decisions that become increasingly worse the more trouble they’re facing (e.g., taking out payday and title loans).
So how can individuals improve their financial well-being? The Ramsey approach stresses behavior change over “head knowledge,” guiding people to adjust the way they think about and interact with their money. Using the Seven Baby Steps, complemented by a powerful combination of plain-language education and inspiration, individuals can follow a proven path to taking control of their finances. At the Summit, Gutierrez noted that if people’s financial houses are in order, then it becomes much easier for them to then focus on other aspects of their own well-being.
To learn more, read about the Ramsey approach in action in the workplace – outstanding results achieved in just 90 days.