A new study suggests that financial wellness engagement isn’t about what you know, but about what you think you know.
In the “Inside Employees’ Minds – Financial Wellness” report, Mercer found that financial literacy or knowledge was not as important as is often thought, and that its more about helping individuals become more confident about engaging in financial issues – what Mercer calls “financial courage.” “When employees have financial courage, they’re more likely to engage with a financial wellness program when prompted,” according to the report.
Not that a lack of financial wellness was all about income; Mercer found that 14% of those in the two lowest financial wellness groups had household incomes of more than $100,000. However, that income group also comprised 73% of the top two financial wellness groups.
As for those individuals who haven’t acquired that courage, Mercer suggests employing greater support, “do it for me” solutions, and incremental “wins” – small financial decisions – that build confidence.
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Mercer also found that one’s perceived financial literacy – their level of confidence, irrespective of actual financial knowledge – was a significant factor driving whether or not individuals engage with financial planning resources. Those with a more favorable self-rating were found to be more likely to engage with a financial advisor and to seek guidance in improving their financial well-being.
Mercer embraces the definition of financial wellness outlined by the Consumer Financial Protection Bureau (CFPB), specifically a state of being in which the individual has control over their day-to-day, month-to-month finances, has the capacity to absorb a financial shock, is on track to meet financial goals, and has the financial freedom to make choices that allow them to enjoy life.
Mercer noted that while retirement and “keeping up with monthly expenses” were prevalent financial concerns, but the latter was a larger concern (62%) for those with low financial wellness scores, while retirement was a greater focus for those with higher financial wellness scores (their largest single concern, cited by 22%).
The study found that on average, people spend about 13 hours per month worrying about money matters at work – about 5 hours at the median, suggesting that some spend a lot more time than others thinking about such things.
Nor is this worry limited to those with low financial wellness scores; nearly 1-in-10 of those with high wellness scores still spend more than 20 hours a month worrying about financial issues.
