Money

Financial Wellness Score: An Important Tool on The Road to Financial Wellness

Financial Wellness Score

Financial wellness is about your health and wealth. It’s about the overall quality of the life you’re living. Financial wellness takes into account how you think and feel about money. It’s not just about measuring your financial numbers and achieving financial goals but how those numbers impact your wellbeing and how those goals relate to improving your living situation.

As an executive, I’ve spent years championing the importance of financial education as part of my company’s workplace wellness program. After founding Phroogal, I’ve taken that purpose on the road and with a broader mission to get people to understand how financial knowledge is life changing. I’ve met thousands of people all across the country and our community has continued to grow to over 65,000 people who believe as we do about health and wealth.

After my road trip last year, I was wondering how we can help organizations and people get a bird’s eye view on how they are doing with their finances that took into account objective (numbers) and subjective (feelings) factors. When you take into account how people feel about their financial numbers, we find the areas to improve and then create a plan that will work.

This thought has been on my mind and wondered if we’d ever get to the point of developing a methodology.

Well about two weeks ago I was invited by Fidelity to learn about some new products and tools they developed. I flew to San Francisco and spent half a day with the Fidelity team. For transparency Fidelity paid for my flight and accommodations. Fidelity Investments created the Fidelity Wellness Score for “for people to measure their financial health, identify the areas where they need help and how they can improve.”

“To enhance our Financial Wellness program, Fidelity developed a way to measure Financial Wellness and offer a clear way to assess if a person is financially well. The score is based on what we believe are the four key domains of Financial Wellness: budget, debt, savings and protection, all of which are equally significant,” said Jeanne Thompson, senior vice president of Thought Leadership, Fidelity Investments. “The score is unique in that it accounts for objective criteria, such as how much savings a person has and how they manage expenses, and subjective criteria, like how they feel about their finances. We believe Financial Wellness means being well and feeling well.”

Financial Wellness Score

Fidelity’s Financial Wellness Score is based on a scale from 0 to 100, where 0 represents extreme financial distress and 100 indicates the maximum level of financial wellness.[iii]

I was fortunate to get a first hand and behind the scene look at the program. They conducted a survey of more than 6,000 people that looked at their retirement but also asked questions pertaining to daily financial activity. I think this is important because we all know the importance of planning for retirement but our daily financial situation may prevent us from doing so. When Fidelity came up with their methodology I applauded their effort in understanding people can’t think of the future if they are trying to figure out how to pay for rent or put food on the table.

Financial Wellness Score

Here are some additional interesting facts:

 

Applying the Fidelity Financial Wellness Score, the results reveal 14 percent of those surveyed are financially “excellent” (a score between 81 and 100), 37 percent are “good” (a score between 61 and 80), 33 percent “fair” (a score between 41 and 60) and 16 percent “need attention” (a score between 0 and 40). Here are the observed attributes of respondents in each category.

The survey also reveals:

  • Generation X is the most financially stressed: More than half of GenXers[v] (52 percent) feel neutral or negative about their debt situation. By comparison, nearly two-thirds of Boomers[vi] (65 percent) feel like their debt is manageable.
  • For many, money brings happiness: 57 percent of those surveyed said they could not be happy unless they are financially secure. Surprisingly, Millennials[vii] are more likely to feel this way than other generations with 66 percent agreeing with the statement.
  • People are most concerned about debt: 30 percent agree strongly that their household has too much debt and 11 percent say they think about debt “all the time.”
  • Financial stress hits home for women: Women are twice as likely to report feeling worried or sick about their financial situation as men.

Financial Wellness Score

“When the Financial Wellness Score is made available this summer as part of Fidelity’s Money Checkup, it will be a wake-up call for some employees and for others it will bring peace of mind. The score will bring clarity to where they stand financially and put a spotlight on next steps,” added Thompson. “We’ll be working with employers on how they can incorporate this Financial Wellness measure as part of their strategy to give employees the financial confidence and control they need.”

I can’t wait to continue to dive deeper into their score matrix and share this tool with others. I think this is a big step on the Road to Financial Wellness.

 

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How to Spring Forward Your Finances

Daylight Savings Time begins on March 12 this year and as we move into the Spring season this day has always reminded me to take a moment to spring forward our finances. There are many things that can distract us in our daily lives so it’s important to use days like these to remind us to take time to evaluate our financial situations and set goals.

I’ve always found springtime to be an easier period to reevaluating financial relationships and assessing financial goals. I feel this way because the sun is out a little longer and the warm weather brings with it a better mood.

Today, I am the guest for #CashChat a weekly Twitter chat hosted by the amazing Tarra “Ms. Madam Money” Jackson, a good friend and colleague.

I’m challenging you all to a 238 day of Daylight Savings. The prize? Your savings account after the challenge is over.

The goal of course is ingraining the habit of savings well before the holiday spending season begins which coincidently is when DST ends on November 2nd.

4 Ways to Save During Daylight Savings Time

(originally appeared on phroogal.com)

1. Set a savings goal. Set a savings goal that you’d like to achieve by November 1st. It might be funds for the holiday gift list, a winter vacation or simply challenge yourself to see if you can set a financial goal and achieve it.

2. Transfer a dollar a day. If saving is something you haven’t done, start by depositing or transferring $1 each day into a savings account. Don’t cheat by depositing $7 for an entire week. The idea is for you to become aware of your savings account and ingrain a habit of depositing into it. One dollar doesn’t seem a lot but think of it as an exercise. The small amounts lead to larger weights…er…um…dollar amounts.

This exercise is great for children too. Give your child a dollar and have them place it in a savings jar. If you’re tech savvy, show your child how money is transferred from your account into their savings account online.

3. Save $5 a day by cutting out a daily treat. If you’re like me you might be spending $5 on coffee at your favorite cafe. During DST, goal yourself to save $5 per day and place that amount into a savings account. By the end of Daylight Savings Time, you’ll see a savings account with $1190.

4. Lower monthly expenses. Spring into action and cut out unnecessary monthly payments. Call up your cellular company, cable, gas and oil providers and ask for a discount or learn about new deals that can save you money. Any dollars you save on bills is then transferred into a savings account.

We all know the importance of savings and there are many ways to save. The motivation to save is just a latent one so we do need clever ideas to get the savings mojo going.

What are some of your ideas to save during Daylight Savings Time?

Thank you all so much for joining us and stay in touch. Make sure you subscribe to the newsletter and check out my bestselling and The New York Times reviewed book, You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life

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Money

6 Money Mindset Lessons for Millennials

6 Money Mindset Lessons

As a millennial, I dream big and everything I do is intentional and serves a purpose. I wasn’t always this way. It took years of professional success, financial distress and low personal satisfaction to get to where I am today. I am more mindful of the decisions I make and understand the implications my financial knowledge has had in my ability to live my dream lifestyle.

We are a purposeful bunch and we care a lot about social impact. We also understand the importance of financial freedom in order to do things of significant importance. However, many millennials are straddled with student loan debt, low wages compared to cost of living in the cities they reside, and difficulty in finding affordable housing.

Here are six money mindset lessons that truly resonated with the millennials we met around the country:

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Money

What is financial wellness?

Financial wellness is about your health and wealth. It’s about the overall quality of the life you’re living. Financial wellness takes into account your financial and life goals.

What is financial wellness

Financial wellness makes you aware of your values and then allocate your time and resources to what matters most.

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Money

Your Money Mindset: Are You Unconsciously Spending on Likes Not Loves?

Jason Vitug Money Mindset

A few years ago I found myself wondering why I was buying the things I bought. Why did I need to own two cars, a motorcycle, live in an expensive apartment, or have a walk-in-closet filled with clothes with tags still on them? Why did I need a new phone each year or get the latest tech gadget? Did I really need to spend $40 per night on dinner or go out for a weekend bar crawl and spend $200-300?

I was living life and enjoying it but I also felt unsatisfied. Something was missing and I was trying to fill it with things such as an $1800 watch and weekend retreats. I was making money but I was also spending it. I didn’t have a plan aside from stashing money into my 401(k), buying stock through my company’s ESPP (employee stock purchase program) and holding onto debt. I also held onto debt because it became a purpose for me to work.

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Money

Time is Not Money

Jason Vitug Money Poem

 

We often hear the words time is money. The truth is time is worth more than money. Money can be made after you’ve spent it. However, time once spent cannot be made back.

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