By Rob Levy, Vice President, Research and Measurement, Financial Health Network
April is Financial Literacy Month, and Financial Health Network is celebrating #FinHealthMatters Day on April 25th. Additionally, we frequently hear about financial inclusion, financial wellness, financial well-being, financial security, and more. Are these terms any different? What should be our real goal?
Before the financial crisis, the two most popular terms used to describe work done to help people with their finances were either financial literacy or financial inclusion. While those terms are simple to grasp, the implication was that the right amount of financial education or having access to a bank account could solve the problems of financial insecurity.
However, the past 10–15 years have shown us that education and access alone are not sufficient to prevent financial hardship or help people improve their financial lives. The rise of behavioral economics, as well as more than 180 research studies have demonstrated that traditional delivery of financial education does not lead to sustainable behavior change. And the financial crisis proved that even those who are deeply included in the financial system — with access to bank accounts, credit cards, and mortgages — can wind up in financial disaster. Financial literacy and inclusion matter, but they are not the whole picture.
Over the past ten years, we’ve seen even more companies and organizations start to connect the building of knowledge and access to tangible consumer outcomes. Whether called financial well-being, financial wellness, or financial health, the aim is to provide a holistic view of a person’s overall financial life. Additionally, drawing from a physical health metaphor, these terms frame a complete and impact-focused view that can identify behaviors, policies, and products that really make a difference.
The shift has been powerful. While the financial health of America is still dire, there are new solutions being developed every day to help people better manage their budget, save for a rainy day, or build their credit. And they are having a real impact. Prize-Linked Savings, for example, were initially made popular by credit unions and more recently given a boost when adapted to a retail player, resulting in over $2 billion in consumer savings.
At Financial Health Network we are advancing the cause of financial health by doing research and building partnerships with leading organizations and our network members. These efforts include:
- Last year, we debuted the U.S. Financial Health Pulse, an annual benchmark survey around a composite financial health framework that provides a holistic look at how people in America manage their finances day-to-day, build resilience, and pursue opportunities over time.
- Partnerships with foundations and organizations such as MetLife Foundation, our founding partner on financial health, to jointly raise awareness and visibility about why financial health is important, and encourage conversations on #FinHealthMatters Day and beyond
- Discussing financial health at our upcoming EMERGE Financial Health Forum, this year’s focus on “Trust, Tech and Transparency” with dedicated sessions focused on financial health measurement, workplace financial wellness, and behavioral design.
Looking to the future of financial health, we need to ask not only if we are having an impact, but for whom? With diversity and equity in mind, we are considering how language and efforts around financial health can matter for everyone, across spectrums of race, age, gender, ability, and geography. How can the next evolution of our language reinforce the focus of our efforts on the most struggling consumers, and identify the inequality gaps wherever they may be? What if the future of financial health (or financial well-being or financial wellness or whatever you prefer), is financial health for all?