They say money does not buy happiness, but it can certainly buy peace of mind. So much of our wellbeing is rooted in how we feel about our finances. This aspect of our lives has the power to impact our overall wellbeing, and in some instances, consume all our thoughts. As a financial services provider, what can you do to facilitate a healthy relationship between the Mind and the Finances?
The financial services industry has a crucial role to play in promoting and supporting the financial wellbeing of customers. But one size does not fit all and there are important factors to consider when planning your approach to improving financial wellness globally such as cultural context, levels of financial and digital inclusion, financial literacy rates, government support available and the provision of financial capability tools, initiatives and education programs by different providers.
At a high level, however, it helps to start by considering what it means to be at an optimal level of financial wellness, and how financial service providers can support the needs of customers. Insights gained from RFI Global research show that being at an optimal level of financial wellness has different meanings for different consumers, though some common themes exist. Here are the top ones to consider:
Younger consumers are typically less likely than older consumers to feel they are at an optimal level of financial wellness, and there are elements that influence this such as their income, the savings they have built up and the stability of their employment, particularly when considering that younger consumers are more likely to be casually employed and these roles were particularly disrupted during the pandemic.
Other factors to consider are the ways in which money is spoken about at home when children and teenagers are growing up, and the stress that is associated with money. Oftentimes families avoid talking about money because it is a significant stressor, however there is value in the ability to speak about money openly and ask questions as they arise. There is also value in education programs and platforms that are tailored for children and youth.
Another important consideration for financial service providers to consider is the current financial landscape their customers are in, including rising cost of living, petrol prices, rising rates on lending products and increasing reliance on credit products to meet everyday expenses.
The strategies consumers take to help mitigate financial stress and build up their savings is typically to reduce spending of non-essential and discretionary expenses, delay large purposes or simply try to make more effort to save money just in case. However, managing money can be stressful and some consumers avoid looking at their bank balance as it is too confronting to be faced with this.
Considering this and considering the role that personal finances play in meeting essential expenses, supporting lifestyles and helping meet goals such as buying a home or travelling abroad, there are some areas that financial service providers can consider to better support the needs of customers. These are outlined below.