For far too many of us, asking about our finances elicits an immediate stress response. Whether the inability to shake off university debt, the difficulty in building future savings, or the juggling of multiple conflicting demands, the state of our finances has an undeniable and intrinsic link to our quality of life and overall physical and mental wellbeing. And, according to the 2016 edition of PwC’s Employee Financial Wellness Survey, financial stress is on the rise, with Millennial’s typically in worse shape with regards to their personal finances than previous generations.
While people may think of finance as quite a quantitative field, our relationship to our finances as individuals is very emotional. This brings two important points to light:
Our financial wellness is strongly correlated to our physical and mental health
Our behavior and decision-making when it comes to our finances is not necessarily rational
Financial Wellness, though increasingly an area of interest, perhaps driven both by a societal focus on wellness as well as a Fintech response to a market need, has no official definition — in fact, it is a somewhat esoteric concept and still broadly unfamiliar to the general public. As Vica Manos explained, when setting up the financial wellness investment partnership between Anthemis & MMI Holdings, their survey of existing literature led them to define it as a customer-centric value proposition touching various aspects of one’s life: a continuous process of financial planning, management and behaviour adjustment with the aim of affording your planned and unexpected expenses in order to reach your goals over your lifetime.
Financial Wellness is a concept that touches all of us, both those who have access to traditional financial services and those who do not and are addressed by initiatives looking at financial inclusion. To operate in society, we are all beholden to an economic system for which we require access to monetary and credit services to participate, be they formal or informal. Sadly, these typically come at the greatest cost to those who can least afford them (sometimes referred to as the poverty premium). Whether due to geographical distances, the inability to cover a minimum balance, or lack of formal identification requirements, relying on informal financial services means limited options which are typically much more costly…