With all the expenses made from the last quarter, Financial Wellness Month opens the year by reminding us of the ins and outs of financial concepts. It’s not only about bank statements, taxes, and budgets since money matters affect our well-being.
Money conversations should not be taboo. So, this awareness month opens the door to discussions, advice, and shared experiences that help us all become more financially savvy. It's also a wake-up call to reassess our financial habits before another year begins. Read on to learn more.
Featured in: January - Awareness Months, Days & Observances.
History and Background of Financial Wellness Month
In the early 2000s, a nonprofit organization called the National Foundation for Credit Counseling (NFCC) realized that financial wellness was about dollars and cents and transforming people's lives. And so, in 2004, Financial Wellness Month was born.
January was the top pick because it is when we are all filled with optimism and resolutions, especially those about our finances.
As the largest and longest-serving nonprofit credit counseling organization in the U.S., the NFCC has always been a leader in financial education. The introduction of Financial Wellness Month was a significant step forward in their mission.
Now, let's fast forward to 2010. The NFCC launched a program called "Sharpen Your Financial Focus." It offered various services, from personalized financial reviews to credit report evaluations.
And the public wasn't the only one who took notice. Personal finance guru Suze Orman and former Federal Reserve Chairman Ben Bernanke endorsed the program, further validating the NFCC's mission.
And so, Financial Wellness Month continues to make waves, reminding us every January that financial wellness isn't a luxury but a necessity.
The Cause and Its Challenges
Financial Wellness Month focuses on a typically unseen issue: the widespread lack of financial literacy. This problem isn't confined to a particular demographic. It cuts across societal boundaries, affecting everyone from the wealthy to those living paycheck to paycheck.
There are several challenges in addressing financial illiteracy. For instance, the societal stigma associated with financial struggles often stops people from seeking help or learning more.
Another major obstacle is the scarcity of financial education resources that are both accessible and easy to understand. And let's remember the difficulty of changing ingrained financial habits, which only adds to the issue's complexity.
Essential Facts About the Cause
- Money-related problems caused stress to parents and adults aged 35-44 years old the most.
- Financial worries are attached to psychological distress1, especially among the unmarried, the unemployed, lower-income households, and renters.
- Studies reveal that people with moderate to high levels of financial stress have a higher risk of coronary heart disease3.
- People with chronic diseases tend to have more financial challenges2, especially when they do not have access to public health insurance.
- High earnings do not necessarily equate to financial wellness4. A survey reveals no further improvement in life satisfaction for people with annual income beyond $75,000.
5 Actionable Steps For Financial Wellness
Developing financial well-being is an essential part of overall growth and stability. Here are five straightforward steps to achieve this outcome.
- Evaluate Your Finances: Understand your current financial standing by assessing income, savings, and expenses.
- Set SMART Financial Goals: Define what you want to achieve financially in the short-term and long-term. Whether it’s retirement planning, updating insurance policies, setting up an emergency fund, or looking into tax benefits, you can ask for help from a financial advisor.
- Budget Your Money: Plan your earnings and expenditures to control your finances consciously. Practice setting aside savings first once you receive your income.
- Increase Income: Most of the time, incoming income is an issue. Create multiple income streams, whether in the form of a small business, part-time job, or passive investments.
- Eliminate Debt: Minimize borrowing and pay off existing debts to maintain financial health. Ask banks if you can consolidate credit card debt for a sustainable payment plan.
Efforts and Initiatives
Around the world, the call for financial wellness is resonating. The Financial Wellness Network (FWN) is leading the way. Its webinars and online resources are crafted meticulously to bolster financial knowledge.
Let's not forget about governments stepping up. The U.S. Federal Reserve, for example, offers educational resources and enforces fair lending policies. Thousands of miles away, the United Kingdom launched the UK Strategy for Financial Wellbeing by the Money and Pensions Service (MaPS).
Finally, let's shine a spotlight on the nonprofit sector. The National Endowment for Financial Education (NEFE), based in the U.S., has programs like the High School Financial Planning Program (HSFPP) and CashCourse for college students. The goal is to arm young Americans with the financial know-how they need.
Parallel to this, Operation HOPE, another nonprofit, is breaking new ground. Their flagship initiatives, "HOPE Business In A Box Academies" and "Banking on Our Future" programs, are making waves and shaping financially savvy generations.
How to Get Involved and Support the Cause
- Enhance financial literacy by reading books or subscribing to finance-focused blogs. Knowledge is a powerful ingredient for financial freedom.
- Share financial wellness benefits and tips online.
- Take a friend along on your financial wellness journey by being each other’s accountability partner.
- Invest in financial support in the form of reliable financial advisors. Their advice can help you navigate complex economic landscapes.
- Vigilantly look for online webinars about finance or financial wellness programs. These platforms offer vast knowledge from experts that can be accessed at your convenience.
- Lobby policymakers to make changes to financial policies.
- Finally, spare time to review your current financial plan. This helps you stay updated and aware, making future planning easier and more accurate.
Conclusion: Financial Wellness Month
After spending so much during the holiday season, Financial Wellness Month starts the year with the perfect timing to promote the importance of managing all aspects of our financial life.
From setting appointments with a financial planner to setting savings goals, we all have a month full of opportunities to make our New Year’s resolutions a reality. Also, remember to encourage friends and family to set their financial footing with you!
Financial Wellness Month FAQs
Financial Wellness Month is an annual awareness campaign that promotes financial well-being and provides resources to help individuals improve their financial health. It is celebrated every January, perfect for people to make financial resolutions for the new year.
Overall, financial wellness is essential because it helps individuals achieve financial stability, reduce stress, and make informed decisions about their money. It can lead to greater overall well-being and a sense of security.
Starting your financial journey involves creating a budget, reducing debt, saving for emergencies, investing wisely, and seeking professional financial advice when needed. It also includes developing good financial habits and staying informed about financial topics.
Yes, there are many free resources available to help with financial wellness. These include online budgeting tools, educational websites, podcasts, and workshops offered by financial institutions and nonprofit organizations. Additionally, libraries often have books and resources on personal finance that can be borrowed for free.
You can support Financial Wellness Month by spreading awareness about the importance of financial wellness through social media, sharing resources and tips with friends and family, attending financial education events, and taking steps to improve your financial well-being.
Ryu, S., & Fan, L. (2022). The relationship between financial worries and psychological distress among U.S. adults. Journal of Family and Economic Issues, 44(1), 16–33.
Peng, Z., & Zhu, L. (2021). The impacts of health insurance on financial strain for people with chronic diseases. BMC Public Health, 21(1).
Moran, K. E., Ommerborn, M. J., Blackshear, C., Sims, M., & Clark, C. R. (2019). Financial stress and risk of coronary heart disease in the Jackson Heart Study. American Journal of Preventive Medicine, 56(2), 224–231.
Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences of the United States of America, 107(38), 16489–16493.