First in a series
Are your participants worried about:
- Making ends meet?
- Unexpected expenses?
- Not saving enough for retirement?
- Deciding when to claim Social Security?
All while watching other financial obligations pile up? If so, we can help you help them.
Welcome to Vanguard's Guide to Financial Wellness.
If you didn’t already know, or perhaps didn’t have it marked on your calendar, January is Financial Wellness Month. This is a time when you can not only assess your personal financial well-being, but also set yourself up for success in the new year—which can be especially important given our current environment of rising inflation and market volatility.
After all, it’s no secret that money can be a source of anxiety for many people. A 2022 survey from the American Psychological Association reports that money is a significant source of stress for 65% of Americans—a figure that grows to 82% for people under age 43.
Percentage of Americans for whom money is a source of stress
Source: American Psychological Association, 2022. Stress in America: Money, Inflation, War Pile on to Nation Stuck in COVID-19 Survival Mode.
But personal finances don’t have to be a grim spot in an otherwise bright life, regardless of one’s financial status. As Vanguard’s Guide to Financial Wellness makes plain, following a few easy guidelines can help put your participants on the path toward paying their bills, lowering their debt, and coping with an unexpected financial emergency—all while maintaining a firm grip on their retirement preparation.
The guide defines financial wellness as:
The objective financial situation of a person, household, or family. It is the ability to meet current and near-term financial obligations and to be on track to meet your future goals.
Take control of finances
Taking control of one’s finances is the first step toward realizing financial wellness. This is the step in which your participants determine where their money’s coming from and where it’s going. In other words, create a budget. We realize not everyone likes to do this, but a budget is a powerful tool to help get finances in order. There’s no one-size-fits-all solution to budgeting, so the guide encourages participants to design one that works for them. And it offers four different approaches to help them get started.
From here, they can focus on effective debt payment strategies, spending strategies, and growing their retirement savings. The guide will help with clear action steps.
Prepare for the unexpected
The next step toward financial wellness deals with uncertainty—because life happens. Cars break down. Pipes burst in winter. People get hurt.
This section of the guide details how your participants can mitigate financial risk in their lives. One key suggestion is to build an emergency fund to stave off that sudden plumbing crisis or other spending shock. Another is to set aside savings in case of a loss of income.
The guide also helps your participants navigate the world of insurance (and it’s a big world) for more catastrophic financial setbacks. It further delves into how to be legally prepared for setbacks with appropriate documentation, such as a will, power of attorney, or beneficiary designation.
While uncertainty can be overwhelming, the guide lays out actions that your participants can take now to help them be more prepared.