For more and more consumers, the ability to feel financially secure has become more complicated and increasingly stressful as the burdens of health care, educational funding, retirement, and daily expenses grow. This stress impacts consumers’ personal relationships, physical and mental health, and has a significant impact on productivity at work.
Fiscal wellness reaches far beyond simply setting aside more money. The concept has a foundation of financial education and the need to change current behaviors. Pretty charts and budgeting tools do little good if the underlying behaviors can’t be modified.
Making matters worse, most consumers have no idea of how secure they are (or aren’t). According to research released by Prudential Financial, Inc., one-third of Americans do not have an accurate handle on the state of their own finances, thinking they are either better or worse off than they actually are. The research also found that Americans’ most pressing financial worry is the thought that they will never be able to retire and will have to continue working as long as they can hold a job.
These findings are reinforced by insights from the Center for Financial Services Innovation (CFSI) on individual financial behavior indicators. This study found that when the interconnection between spending, saving, borrowing and planning are analyzed, many consumers turn out to be struggling.
- Only 28% of Americans are considered financially healthy.
- 47% of consumers spent more than or equal to their income in the last 12 months.
- More than a third of all consumers (36%) are unable to pay all of their bills on time.
- Nearly a quarter (22%) of all Americans say they worried that their food would run out over the last 12 months.
- Nearly a third of Americans (30%) say they have more debt than they can manage.
With so many households classified as financially unhealthy by CFSI, it is imperative that traditional and non-traditional financial services organizations provide financial wellness tools that can change consumer behavior.
Virtually no traditional financial institution offers the tools that consumers in need require. Third-party budgeting apps are only a small part of the solution to relieve financial stress. Making matters worse, most banks and credit unions don’t even collect the basic data needed to provide basic assistance.
There is a great opportunity for financial institutions to leverage data already collected and insights consumers would be willing to share. What is needed is a great financial education tool, tracking capabilities, a rewards component, ongoing engagement and a “personal financial trainer.”