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What is financial wellness?

You’ve probably been hearing from your family, friends, and co-workers about the importance of spending wisely, saving often, and planning for a secure financial future. Taking control of your financial health today can help you achieve a more stable life for yourself and your family. However, financial wellness is more than a buzzword. It’s about you and your employer taking an active role in improving your financial wellness and getting the support you need to make healthy financial choices that can improve your long-term financial health.

Financial wellness is how you can measure your financial situation and how effectively you manage your financial life. How much you save, spend within your budget, and build retirement savings are all factors that need to be considered while measuring financial wellness. These key areas can be consolidated into four main components that will present an accurate picture of a person’s financial health when put together.

 

 

The 4 elements of financial health

1. Spend

In this era of multiple checking and savings accounts, credit cards, and personal lines of credit, managing cash flows can be tricky. But not tracking your income and expenses regularly increases the likelihood of overspending and will adversely impact your financial health.

 

  • Spend less than your income

Create a visual budget to track your cash flows. This will allow you to understand where you’re overspending and give you a chance to adjust your spending patterns to help stay within your means. When it comes to financial wellness, no amount is too small. Even a tiny change in your spending pattern can work wonders on your financial health.

 

  • Make timely bill payments

Paying your bills on time helps you avoid unnecessary fees and other late charges. So keep a reminder on the phone, schedule an automatic transfer, or put it on your calendar so that you don’t forget to pay your various monthly bills – utility, credit card bills, rent, mortgage, etc. Creating a Scheduled Transfer into a bill Pocket can help ensure timely payments every month.

 

2. Save

Most financial experts agree that saving 20% of your gross income per month can help you stay on track for your financial goals. While this might not be achievable for everyone depending on your financial situation, it can help when you regularly put in whatever amount you can save to help grow your financial health. Remember, a penny saved is always a penny earned. Using tools like Auto-Save can make saving automatic and put saving at the forefront of your budget.

 

  • Maintain an emergency fund

Your needs, aka living expenses, should always remain a priority. Maintaining cash savings of at least six months of living expenses is best to cover any unexpected expenses and emergencies. You can put money regularly in your savings account (preferably with a high-yield interest APY) to fund unanticipated financial emergencies and avoid stress during financially challenging times.

 

  • Have sufficient long-term savings

If you have some large, long-term savings goals, you’ll need to start saving up as soon as possible. Take some time to set up a tax-beneficial 529 college plan for your children, participate in your employer’s 401(k) plans, or invest in Individual Retirement Accounts (IRA) or Roth IRA (if you qualify for the contribution limits), to fund your future home or retirement nest egg. 

 

3. Borrow

Credit cards seem like the answer to your financial freedom, but they can also increase the risk of overspending. If your dream purchase is beyond your budget, then researching a more affordable one or saving up as a long-term goal might be the right move. On the other hand, overpaying on a mortgage or having a credit card limit out of your budget can carry some risk and might land you in deep financial trouble.

 

  • Manage your debt load

While debt can be unavoidable, you can take steps to manage your debt levels wisely. Pay down your debts, keep credit utilization low for your revolving debt accounts (credit cards, for instance), and take on affordable mortgages instead of going over-budget on that dream house. This will help you maintain a sustainable debt load and avoid further financial difficulties down the road.

 

  • Keep an eye on your credit score

Increased credit utilization rates, late payments, applying for too much credit can all hurt your credit score. In addition, prospective lenders depend on credit scores to measure a borrower’s credit effectiveness. Therefore, ensure you make timely payments and take other steps (such as not prematurely closing old credit accounts, making strategic payments, and frequent micropayments) to improve your credit score and manage your financial health.

 

4. Plan

It can be challenging to visualize the future, especially if you’re just graduating from college and starting your career. But, if you want to buy a house, a car, or a comfortable retired life, you will need to start planning early.

 

  • Plan for future expenses and financial goals

Create a way to track your day-to-day expenses with Pocket. You’ll be able to visualize current and future expenses quickly. A budget can help you identify and reprioritize your finances, too. It’s also an excellent way to put your savings on auto-pilot. You can, for instance, set up paycheck Auto-Save to fund your Auto-Save Pocket every time you get paid. Since the funds get transferred directly to your Auto-Save Pocket, you’ll be less tempted to spend it. 

 

  • Get insured

Life is uncertain. Protecting your near and dear ones against unpredictable events is an integral part of achieving holistic financial wellness. Employer-provided health insurance coverage aside, you should also consider opting for supplemental insurance coverage (disability, life, accidental death & dismemberment (AD&D), critical illness insurance) for yourself and your family. This helps you to be financially resilient in the face of unexpected emergencies.  

 

Financial wellness by generation

Millennials

Millennials continue to have the highest percentage of financial stress among the three generations studied. Thirty-two percent are struggling to manage their cash flow, and less than half have an emergency fund to cover unplanned expenses or loss of income. Of the forty-five percent that are uncomfortable with the amount of debt they have, seventy-six percent report feeling overwhelmed by it. Forty-two percent of Millennials carry a balance on their credit card, and forty-eight percent have student loan debt. Of those with student loans, thirty-three percent are struggling to keep up with their payments.

 

Generation X

Also called the “sandwich” generation, this generation often finds themselves having to deal with competing financial priorities. The majority are married (sixty-six percent), have small children (fifty-six percent), and own a home (seventy-five percent). Studies show that Generation X carries the most mortgage and non-mortgage debt of any generation, which might also explain why four in ten feel very uncomfortable or overwhelmed with their personal debt. Three in ten are still making student loan payments, and almost four in ten are struggling to make their student loan payments. Only twenty-eight of the parents in this generation are actively saving for both college and retirement and a mere nineteen percent are “on track” to meet both goals.

 

Baby boomers

The vast majority of baby boomers are moving into or are in their retirement years. Some are retiring with empty bank accounts and bleak job opportunities to help supplement their government stipends. And unfortunately, quickly following is another generation facing similar challenges. In this deeply personal talk, author Elizabeth White opens up an honest conversation about financial trouble and offers practical advice for how to live a richly textured life on a limited income.

“To shame and blame is so deliciously tempting..many of us don’t even wait for others to do it we’re so busy doing it to ourselves. But let’s not mix up individual, isolated behavior with the systemic factors that have caused a $7.7 trillion retirement income gap.”

“We spent the last three decades dealing with flat and falling wages and disappearing pensions and through-the-roof cost on housing and health care and education. It used to not be like this. We all remember the three-legged retirement income stool which had the savings and pension and social security. Well, that stool has gone wobbly.”

 


How to gauge your financial wellness

We’ve broken down financial wellness into four categories, vulnerable, developing, progressing, and thriving, along with ways to assess which categories you might be in and how to help move you forward on your financial journey.

 

Financially vulnerable

If you’re financially vulnerable, you might…

→ Be living paycheck to paycheck.
→ Not be able to save for the future.
→ Not have access to low-interest credit.
→ Have trouble paying bills in full or on time.

You aren’t alone! There are steps you can take and available resources to help lay the groundwork for the journey towards financial stability. We suggest the following:

Schedule a free consultation

Booking a free appointment with an FCCA member agency, FFP organization or NFCC non-profit can help with various financial issues that can be causing significant stress in your life. They are focused on helping financially vulnerable people get the help they need with general budgeting, debt management plans, along with bankruptcy, housing, and student loan counseling.

 

Manage your money for free

If your current bank charges fees, it might be time to explore other options. Opening a free One account can help you keep your hard-earned money in your Pockets.

 

Rebuild your credit history

One’s Credit Builder helps you rebuild your credit history. There are no fees, no interest, and no paycheck direct deposit required to join. It’s an easy way to build your credit history that’s fully integrated into the One account. 

 

Borrow at an affordable rate

If you are currently borrowing money at over 13% APR, it might be time to explore other options. Accessing a lower line of credit can help you pay off your balance sooner and pay less interest over the length of the loan.

 

Opt-in for overdraft protection

Consider adding a no-fee overdraft protection to your One account. Traditional banks can charge multiple overdraft fees in a single day which can quickly snowball. One’s optional overdraft protection is there in case your account dips below zero. Quickly activate so you can keep life going. Any purchase over the available Spend Pocket balance will automatically access a line of credit instead of getting declined. Pay it back in the month you borrow and you’ll pay no interest. If you need to carry a balance, it’s only 1.00% a month or 12% APR⁑ annually. 

 

We were named NerdWallet’s Best Checking Account with Overdraft Fee Avoidance.

 

Financially developing


If you’re financially developing, you might…

→ Be fluctuating financially month-to-month.
→ Be progressing in some areas (managing debt or building savings).
→ Be making only the minimum payments.
→ Be in crisis if there is an unexpected bill.

Let’s keep the good work going! There are steps you can take and available resources that can help build on your current foundation. We suggest the following:

Schedule a free consultation
Booking a free appointment with an FCCA member agency, FFP organization or NFCC non-profit can help advise you in areas you might need extra help with. They are focused on helping people with general budgeting, debt management plans, along with housing and student loan counseling.

Manage your money for free
If your current bank charges fees, it might be time to explore other options. Opening a free One account can help you keep your hard-earned money in your Pockets.

Build your credit history
One’s Credit Builder helps you build your credit history. There are no fees, no interest, and no paycheck direct deposit required to join. It’s an easy way to build your credit history that’s fully integrated into the One account. 

Opt-in for overdraft protection
Consider adding a no-fee overdraft protection to your One account. Traditional banks can charge multiple overdraft fees in a single day which can quickly snowball. One’s optional overdraft protection is there in case your account dips below zero. Quickly activate so you can keep life going. Any purchase over the available Spend Pocket balance will automatically access a line of credit instead of getting declined. Pay it back in the month you borrow and you’ll pay no interest. If you need to carry a balance, it’s only 1.00% a month or 12% APR annually. 

We were named NerdWallet’s Best Checking Account with Overdraft Fee Avoidance.

Borrow at an affordable rate
If you are currently borrowing money at over 13% APR, it might be time to explore other options. Accessing a lower line of credit can help you pay off your balance sooner and pay less interest over the length of the loan.

Earn more on your savings
Traditional banks’ savings rates average .06% APY. When compared to 1.00% APY* you can earn 17X more on the money you’re able to put away. Over a year, you can earn $15.07 (1.00% APY*) versus .90 cents (.06% APY) on $1,500.

 

Financially progressing

If you’re financially progressing, you might…

→ Have a working budget.
→ Be managing debt while building savings.
→ Be making full, on time payments.
→ Be able to cover an unexpected bill.

Woo! Your hard work is paying off. There are steps you can take and available resources that can help increase your financial potential. We suggest the following:

Manage your money for free
If your current bank charges fees, it might be time to explore other options. Opening a free One account can help you keep your hard-earned money in your Pockets.

Build your credit history
One’s Credit Builder helps you build your credit history. There are no fees, no interest, and no paycheck direct deposit required to join. It’s an easy way to build your credit history that’s fully integrated into the One account. 

Borrow at an affordable rate
If you are currently borrowing money at over 13% APR, it might be time to explore other options. Accessing a lower line of credit can help you pay off your balance sooner and pay less interest over the length of the loan.

Automatically earn more on your savings
Traditional banks’ savings rates average .06% APY. When compared to 3.00% APY* you can earn 50X more on the money you’re able to Auto-Save. Over a year, you can earn $45.62 (3.00% APY*) versus .90 cents (.06% APY) on $1,500. 

Get paid earlier
If your employer pays with direct deposit, consider adding it to your One account. It can help you get paid up to two days earlier.


Financially thriving

If you’re financially thriving, you might…

→ Have a long-term financial plan.
→ Be managing little to no debt while building robust savings.
→ Consistently pay bills in full and on time.
→ Be able to cover any unexpected bills.

Great job on your hard work and dedication! There are extra steps you can take and available resources that can help maximize your financial future. We suggest the following:

Schedule a free consultation
Booking a free appointment with an FCCA member agency, FFP organization or NFCC non-profit can help advise you in areas you can further improve on. They are focused on helping people with general budgeting, debt management plans, along with housing and student loan counseling.

Manage your money for free
If your current bank charges fees, it might be time to explore other options. Opening a free One account can help you keep your hard-earned money in your Pockets.

Borrow at an affordable rate
If you are currently borrowing money at over 13% APR, it might be time to explore other options. Accessing a lower line of credit can help you pay off your balance sooner and pay less interest over the length of the loan.

Increase your savings potential
If your employer pays with direct direct, consider adding it to your One account. It can help you get paid up to two days earlier along with saving at an industry-leading 3.00% APY* on up to 10% of your paycheck ($1,000/month).

Automatically earn more on your savings
Traditional banks’ savings rates average .06% APY. When compared to 3.00% APY* you can earn 50X more on the money you’re able to Auto-Save. Over a year, you can earn $364.99 (3.00% APY*) versus $7.20 (.06% APY) on $12,000.  

Automatically save more while spending
Activate card Auto-Save to earn 3.00% APY* on every One card round up. There’s no limit to how much you can contribute using card Auto-Save!

 

Financial Health Resource

Booking a free appointment with an FCCA member agency, FFP organization or NFCC non-profit can help with various financial issues that can be causing significant stress in your life. They are focused on helping financially vulnerable people get the help they need with general budgeting, debt management plans, along with bankruptcy, housing, and student loan counseling. 

 

Mental Health Resources

The main way to help reduce financial stress is to destigmatize the shame, guilt, embarrassment surrounding money struggles. Admitting to yourself that you need help can be difficult, but getting help can be even harder…just know that you are never alone. Getting help and starting your journey to a more positive lifestyle can sometimes only be a click, text, or phone call away. Check out these resources that provide you with the information you need to reach out, or help a friend reach out. Know that there is always help. This is not a complete list of resources but a good place to start.


National Hopeline Network | 1.800.442.4673
Mental Health America | Text MHA to 741741
National Suicide Prevention Lifeline | 1.800.273.8255


AAPI Focused
Asian Mental Health Collective | Text CONNECT to 741741


Black Focused
Therapy for Black Girls and Women | Website
The Loveland Foundation | Website
Black Men Heal | Website
Aakoma Project | Website

 

Indigenous Focused
We R Native | Website

 

Latinx Focused
Latinx Therapy | Website
Su Familia | 1.866.SU.FAMILIA [ M-F 9am – 6pm EST ]

 

LGBTQIA+ Focused
The Trevor Project | Text START to 678678
NQTTCN | Website

 

5 common cognitive biases that could be affecting your finances

 

Familiarity Bias

It’s the preference to remain in a “financial comfort zone.” They don’t want to expand into new areas even when it could be financially beneficial. 

Example: I’ll keep my money at a credit union because I know what that is. I’d rather not open an account at a digital banking service even if the benefits are better.

 

Outcome Bias

It’s making a future decision based on past outcomes instead of all contributing factors.

Example: I’ll invest all my savings in that trendy new cryptocurrency because I doubled my money with Bitcoin.

 

Stereotyping

It’s expecting something to have certain qualities without concrete information or facts.

Example: I won’t get live customer support because digital banking services have no physical locations.

 

Confirmation Bias

It’s tending to only listen to information or people that confirm our preconceptions.

Example: I am skeptical of digital banking services. My traditional bank’s blog confirmed they’re not a good choice.

 

Blind-Spot Bias

It’s not recognizing our own biases. We tend to notice others’ biases more often than our own.

Example: Anyone with a digital account clearly has something against in-person banking.

 


 

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