What is financial wellness?

15 February 2017

JAMs, or people who are ‘just about managing’ has entered the political lexicon in recent months. That implies that some people manage, some don’t, and some just about get there. But the truth is that almost all of us are financially unwell to some degree – we just don’t have a firm grasp of how to balance what comes in against what we want to achieve in the long term.

Unless you have so much money that you can literally afford not to worry about it, the chances are that you are financially unwell. This could cover a range of scenarios, from not having a bank account to worrying about your retirement. But broadly, it means that you have financial needs that aren’t being properly met – you don’t have enough money to meet your financial commitments, secure your future and enjoy life today.

Have any of these crossed your mind recently?

  • I don’t understand how pensions work
  • I have some pension plans but don’t know what my retirement will look like
  • I have been left a small sum of money. What are my options?
  • How do I set savings goals and manage them?
  • I struggle to save anything at all
  • I think there might be ways to save tax in how I save, but am unsure
  • What is my credit score and why should I worry about it?
  • I use several different forms of debt but I don’t know if that’s costing me more or is good for my credit score
  • What do other people like me do for long term savings?
  • I’ve just entered the job market - I’ve got debts and I’ve no idea about long term savings.

Improving our financial wellness, individually and as a society, isn’t easy; it requires focus and effort and that means it’s often put off until tomorrow. With a few exceptions, our attention span isn’t brilliant when dealing with financial issues and our appetite to pay for professional advice has declined. Instead, consumers expect ever more data-enriched, insight-driven, interactive and digital ways of addressing their financial issues.

As an added complication, regulation has made banks and insurers wary of veering off a set script when dealing with their customers’ needs. And at a time when consumers are demanding better, easier, more accessible digital services, many are struggling to offer basic digital access to their existing products, and to use the data they already have to help.

This is where Fintechs come in. I don’t necessarily think Fintechs are the silver bullet here but they’re perhaps the most promising vehicle we have on the path to wellness. It’s not that Fintechs ‘get’ the issue and traditional institutions don’t; it’s more that FinTechs are a force for good in terms of bringing real digital engagement for our financial needs. They’re good at developing solutions that are everything consumers want and need: data-enriched, insight-driven, intuitive to use, engaging, attention drawing, low cost and so on.

We’re going to be exploring financial wellness and the role of FinTechs through a series of blogs and other content in the next few months. Keep checking here for more. 

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Comments

informative.

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