Why Your Financial Health Matters

By Cara Hebert

Like physical health, financial health is fundamentally key to leading a happy and successful life. Creating a sound financial present does more than alleviate current stress - it lays the foundation to a stable and secure financial future.

Sadly, the average American’s financial status has fallen ill these days - with more than half of the U.S. population struggling financially. The Great Recession may have officially ended, but most households still face stagnant wages and increasing debt. Many Americans are actually considered to be poorer than they were a decade ago.

While many believe financial health is nothing more than just managing day-to-day finances, the reality is that true financial strength, as with any exercise, requires repetition and dedication.

So if your financial health is as important as your physical health, why do we have yearly dental and doctor check-ups, but not a required financial check-up?

Probably because, according to the 2015 Stress in America Report by the American Psychological Association,18 percent of adults say money is a taboo subject in their family and 36 percent say that talking about money makes them uncomfortable.

On top of this, the 2016 Money Matter on Campus report found that from 2012 to 2015, college students have shown a significant and steady decrease in nearly all fiscally responsible actions. From following a budget to building an emergency fund to paying credit card bills on time, the incoming rush of new grads is a little concerning.

Couple an awkward topic with what we can only assume is a lack of education for our youth - it’s no wonder adults aren’t taking their financial futures more seriously.

So let’s disregard the “expert” advice and top 10 lists and take a look at the numbers to see why your financial health should be a top priority.

More than half of the U.S. population is struggling financially.

According to the Center for Financial Services Innovation 2015 Understanding and Improving Consumer Financial Services in America report, 57 percent of American adults struggle financially.

Worse yet, this epidemic primarily affects those who have the greatest impact on our economy. While 64 percent of all Americans report money as a very significant source of stress, those stats raise sharply when looking at parents (77 percent), millennials (75 percent) and Gen Xers (76 percent).

72% of Americans are experiencing financial stress at least some of the time.

Regardless of economic climate, money and finances have consistently topped American’s list of stressors since 2007. In some cases, people are even putting their health care needs on hold because of financial concerns. While in 2007, stress levels were universal regardless of income, today, lower-income households report higher overall stress. In fact, lower-income households are twice as likely as higher-income households to feel financial stress all or most of the time (36 percent vs. 18 percent).

The top sources of financial stress reported include:

  • paying for unexpected expenses (54 percent)
  • paying for essentials (44 percent)
  • saving for retirement (44 percent).

More than half of adults (54 percent) say they have “just enough” or not enough money to make ends meet at the end of the month.

Sadly, many American adults barely scrape by each month - and if you’re a young female, the odds are even worse. Nearly 49 percent of women and 57 percent of millennials say that paying for essentials is a significant source of stress (only 38 percent for men).

While this applies to both lower-income and higher-income households, 30 percent of adults who make less than $50,000 a year report that they don’t have enough money to pay their bills at the end of the month, compared with 11 percent of adults who make over $50,000.

Even more scary is that parents make up the majority of this category with a whopping 71 percent reporting they have “just enough” or not enough money to make ends meet. More than half of parents (58 percent) say that paying for essentials is a significant source of stress.

Nearly one-third of Americans (32 percent) say that their finances prevent them from living a healthy lifestyle.

There are lots of tips and tricks for living healthy on a budget, however, 55 percent of adults in lower-income households say they handle stress through sedentary or unhealthy habits such as watching TV, drinking alcohol, smoking, and stress eating. People who report having extreme financial stress are also more than twice as likely to rate their health as fair or poor than those who report low financial stress (44 percent vs. 17 percent).

One-third of college students say financial stressors have negatively impacted their academic performance or progress.

With almost 64 percent of college students using loans to help them pay for college, it’s no surprise that the estimated student loan debt in America is around $1.2 trillion. The average Class of 2016 graduate racked up $37,172 in student loan debt, up six percent from last year. Thankfully, according to the National Student Financial Wellness Study by Ohio State University, more than three-quarters of students still think college is a good investment for their financial future.

Of the students surveyed, 32 percent reported neglecting their studies at least sometimes because of the money they owed. Three out of 10 students had to reduce the number of classes they took, 16 percent had to take time off and 13 percent had to transfer to another school because of the money they owed.

While this may not seem like a huge amount, only 40 percent of college students finish their bachelor’s degree in four years according to the National Center for Education Statistics. The cost of taking one extra year to finish a degree is:

  • At a public college: $18,600.
  • Two extra years at a public college total $37,500.
  • At a private college: $54,000.

When NerdWallet ran their analysis - students who take six years to finish a bachelor’s degree, for example, can miss out on six figures of lifetime retirement savings.

Nearly 1 in 5 Americans say they either considered skipping or skipped going to the doctor because of financial concerns.

As we said before - physical health and financial health are fundamentally key to living a happy and successful life. However, nearly three in 10 lower-income adults have either skipped (20 percent) or considered skipping (9 percent) necessary doctor visits because of finances. When looking at financial health, 44 percent of lower-income Americans cite out-of-pocket healthcare costs as a significant source of stress, as opposed to only 34 percent of higher-income adults.

Couple this with 29 percent of lower-income adults reporting a sense of loneliness and isolation in the past month due to stress (vs. 21 in higher-income adults) and you’ve got a recipe for a whole host of health concerns.

So why is financial health so important?

Your financial health impacts nearly every facet of your life - from affording that yoga class after work to how long you’ll need to keep working before retirement. While over the past year, the majority of American adults have taken steps to live more economically - there’s still more to be done. As with any exercise, financial health isn’t something you can achieve through a one-time intensive workout. You must cultivate your present financial health and consistently look to the future in order to persist through times of economic hardship.

By managing day-to-day finances as well as seizing opportunities for financial security, you’ll be able to create resilient and lasting strategies to carry you through the ups, downs and everything in between.

Resources

2015 Stress in America Report, American Psychological Association

Understanding and Improving Consumer Financial Health in America, CFSI

Money Matters on Campus, EverFi

National Student Financial Wellness Study, Ohio State University

2 Extra Years in College Could Cost You Nearly $300,000, Nerd Wallet

Graduation Rates, National Center for Education Statistics

Written on July 1, 2016

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