Monday, 2 March 2020

Money is an important part of life and, as such, our personal financial situation can have a powerful impact on our quality of life.

According to a 2018 Northwestern Mutual survey, money is the top source of stress in America. What's more, 28 percent of respondents said money-related stress made them feel depressed at least once a month, while 41 percent admitted to having financial disagreements with their partner at least monthly.

Other studies and surveys over the years have linked financial stress to serious physical conditions, including migraines, ulcers, digestive problems, high blood pressure, sleep disruption and more.

On the flip side, being financially stable can have a very positive effect. In the same Northwestern Mutual survey, almost 90 percent of respondents explained that nothing made them happier or more confident than knowing their finances were in order. In other words, financial wellness improved their quality of life.

So, what is financial wellness?

First of all, financial wellness and being financially well-off are not the same thing. You do not have to be rich to be financially healthy. Financial wellness is more about being able to properly manage personal finances, achieve financial stability and work toward your long-term financial goals.

Signs of financial wellness include paying bills on time each month, having little to no debt and saving for retirement. In addition, having enough savings to pay for an unexpected expense, such as a medical bill or car repair, is another aspect of financial wellness.

However, everyone's idea of financial wellness is different. One person might be fine being debt free and setting aside a little for retirement each month. Someone else might prefer a heftier bank account in order to feel financially healthy.

How can we achieve financial wellness?

Education is key, specifically in regards to money management. The good news is many schools, colleges, employers, financial institutions and non-profit organizations now offer financial wellness programs to provide much-needed education and guidance about proper ways to spend, save, borrow and invest.

For example, learning how to create and maintain a monthly budget can help people pay their bills on time, monitor and control expenses and make it easier to save. It can also give people a sense of control over their money, which can help them feel more confident and optimistic about the future.

But budgeting and saving aren't always easy. Again, there's good news: Many banks are now offering free online tools designed to help customers improve money management. Using these, customers can do everything from creating a budget and setting alerts for when bills are due to automatically transferring money from a checking to a savings account each month.

Encouraging and reinforcing good money habits are important parts of the equation as well. Whether it's an app that reminds and rewards a person for adding to their savings or an employer matching 401(k) contributions, positive feedback for sound financial management can help create good money-management habits that last a lifetime.

Financial wellness has a far-reaching impact

Studies and surveys have repeatedly found that financially-stable employees perform better at work, are more satisfied with their jobs and contribute more to the growth of their organization. In fact, a recent survey found 70 percent of companies currently have financial wellness programs for their employees; half of them plan to expand those programs in the near future.

Overall, people are healthier and happier when they are confident about their finances. By understanding how money works and the best ways to manage it, they can make smart financial choices for their family and their future. And financially-healthy individuals and families are able to fully participate in and contribute to the local and national economy.

The widespread investment in financial wellness programs is evident. The knowledgeable and responsible financial consumers they create include more credit-worthy customers, potential homeowners and business owners who can intelligently buy homes, travel, shop, pay taxes and invest. 

Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.

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