The journey toward financial freedom
How Americans define financial wellbeing, how they get there and what stands in their way
Financial wellbeing is a term that’s commonly used when talking about people’s financial health. But what does “financial wellbeing” mean? Without agreement on its meaning, it’s difficult to craft solutions, measure success and find ways to improve Americans’ financial situation.
Research conducted by the Harris Poll on behalf of Empower Retirement and Personal Capital offers important insights on this topic that can help create a more effective framework to improve Americans’ financial security and health.
Americans agree that a one-size-fits all definition for financial wellbeing or financial health doesn’t exist. Instead, Americans strive toward financial independence — having the freedom to spend how they want to. More importantly, survey respondents say their individual financial situations — and how they feel about them — can have a big impact on their overall wellness and mental health.
A strong majority (77%) of Americans say their financial health also affects their physical and mental health, and more than half connect financial health with overall happiness
It starts with the basics
In 2020, the COVID-19 pandemic upended our lives in many ways — including how we think about our finances. For many Americans, the pandemic has prompted a back-to-basics approach centered on spending less and saving more. As a result, the vast majority of survey respondents are focused on their ability to cover bills, expenses and debts. They are also focused on having enough money to pay for their future needs and saving money on a regular basis.
More than two thirds of Americans (67%) say having the peace of mind to cover bills without worry is the #1 thing they need to feel financially healthy
But it’s more than about money. Many Americans feel that financial health is tied to relationships, self-esteem, their careers and many other non-financial aspects. Improving financial health can have a positive domino effect on other aspects of life.
Good news and not so good news
While many Americans believe financial wellbeing is attainable, less than half say they are financially healthy today. Many say they struggle with too little income and too many expenses. Others cite childcare, student loans and healthcare expenses as roadblocks. The key takeaway here is that financial well-being is personal and may look different to different people. In fact, 72% of Americans believe that financial health is always evolving and part of an ongoing journey.
Improving financial wellness
Americans are open to getting help with their finances, and six in 10 associate hopeful and optimistic emotions when thinking about optimizing their financial health. The following e-book is intended to help shift financial wellbeing from an abstract term to a tangible one that helps improve Americans’ lives.
Methodology: This survey was conducted by The Harris Poll on behalf of Empower Retirement and Personal Capital from March 23 to April 5, 2021. We surveyed 2,005 people, all of whom were 18+ and living in the US.
Personal Capital is an affiliate of Empower Retirement. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice.
Latest Empower Institute Articles
Almost three-quarters (73%) of people of color say the concept of financial health needs a makeover.
Employees are clear that financial wellness is an important goal — one that they’d like to achieve.
Based on this analysis, participants do not consider managed accounts to be substitutes for target date funds.