by MSE Staff | Published 15 Mar 2022 

It is a hot summer day, and you decide to fire up the grill and invite your family and friends over to swim in your pool. Everyone is laughing and enjoying the moment to cool off. You pat yourself on the back and relax. You feel heroic as you look into the blue sky. That is when you hear a loud thud followed by crying. Your best friend’s child is lying by the pool with a broken arm and chipped tooth. The boy is immediately rushed to the hospital. He will be fine the doctors say. A few weeks later your best friend is asking you to help pay for the medical costs. She cannot cover all of the medical costs and since it happened on your property, she’s hoping you will pay for it. You toss and turn at night wondering what to do. You are not even sure what your insurance covers. Insurance is an important part of protecting our assets from common life events. In this blog post we will go over the main categories of insurance and their benefits.

#1 Liability Insurance

Liability insurance protects us from having to pay for damages and injury to other people. For example, a person who is injured on your property might be able to hold you liable for thousands of dollars in medical costs. Your liability insurance is designed to pay out a large portion of those costs so that you don’t have to. Each liability insurance product has different terms and conditions that change depending on what state the insurance is issued in. Understanding the details and having a capable agent that is motivated to serve you is essential for having adequate liability insurance. In order to protect our assets from property damage and bodily injury to others, we use adequate liability insurance.

#2 Property Insurance

Whether you own real estate or rent, property insurance protects us from damage, theft, and loss of property. For example, a homeowner may use property insurance to rebuild after a fire. Likewise, a renter may be able to replace property damaged in a fire. Just like with liability insurance, there are some ins and outs to getting reimbursed. You may be able get insured at actual cash value or replacement cost depending on the type of coverage your agent can get for you. To illustrate the difference, actual cash value means that insurance will pay you the depreciated value of your property while replacement cost will pay you the amount needed to replace the property. We protect our assets from damage, theft, and loss of property by having the right property insurance coverage for our needs.

#3 Health Insurance (United States)

All of us will experience at least one major illness in life. The purpose of health insurance is to protect us from medical bills that come from illness. Health insurance is required by law in the United States. There are a variety of options that determine whether you can receive coverage for medical care outside of your network. Taking a class to learn more about the various types of health insurance available and how they can affect the quality of care you receive is essential. We protect our assets from medical bills and provide ourselves with good quality of care by having adequate health insurance.

#4 Life Insurance

Life insurance protects you and your family during the worst of times. For example, a life insurance policy can provide your spouse with and children with money to compensate the income that you would have naturally provided. There are many types of life insurance products on the market today that offer additional benefits. Understanding the rules and penalties surrounding these products will empower you to have the right conversations with your agent so that you get the most coverage at the lower cost. We protect our assets and our loved ones well into the future with adequate life insurance.

Final Thoughts

We have insurance to protect our assets, our health, and our loved ones from common life events. The four main categories of insurance are liability insurance, property insurance, health insurance, and life insurance. While the terminology and rules behind insurance require us to take a few classes, the reward of being financially literate pays off over time. Adequate insurance means having the right amount of coverage at a reasonable cost. Take a moment to evaluate your own insurance. You may find opportunities to leverage more coverage at a lower cost.

by MSE Staff | Published 1 Mar 2022 

It is Sunday evening, and you are visiting a festival in another town. It happens once a year and the food is out of this world. Waiting in line feels like agony but you finally get to the register. “We only take cash,” they say. A wave of embarrassment rushes through you. Of course! How could you forget! You walk over to the ATM and wonder if this will result in out-of-network fees. You are not even sure how much it will cost you. Thankfully, you saved for the festival throughout the year, and it will not be a problem.

 Deciding where to bank can include a lot of caveats like when and where you can access your money and any costs associated with managing your money. In this post, we will identify key differences between banks and credit unions so that you can be prepared in the future.

What Is a bank?

A bank is a for-profit financial institution that offers financial services like check cashing, checking accounts, savings accounts, direct deposit, online banking, branch banking, and automated teller machines (ATM) to name a few. Banks vary in size from small organizations to large organizations. A key feature of larger banks is convenience. They have vast networks with branched banking and ATM services in multiple countries. Of course, for-profit banks view you as their customers and aim to make money for their shareholders and investors. This means that banks generally have more expensive fees than credit unions which we’ll cover next.

What Is a Credit Union?

A credit union is a non-profit financial institution that offers the same types of services that you would find at a bank. And much like banks, credit unions vary in size with large and small organizations. However, credit unions focus on serving their community. They may have agreements with other credit unions to extend branched banking and ATM services to other communities. However, you may be required to be a part of that credit union’s community in order to become a member. Since credit unions are non-profit, their fees generally cost less than banks and they re-invest money they make to serve their members.

Final Thoughts

Choosing where to bank really does have an impact on our daily lives. As life circumstances change, you may want the convenience of a bank or the reduced costs of a credit union. Take a look at how often you travel and consider what you’re most comfortable with. Analyze and evaluate the fees and services offered by your prospective bank or credit union to see which one is a best fit for your lifestyle. It may take some due diligence on your part, but the peace of mind that comes with it will pay off the next time you need to use an ATM!

by MSE Staff | Published 22 Feb 2022 

We all want to get the best results when it comes to managing our finances. Two measurable areas that we can look to include our financial capability and our confidence in those capabilities. In this blog post, we’ll cover 9 areas of personal financial management so that you can decide where you stand. By the end, you’ll have a better awareness of personal financial management and key areas to boost your skills.

#1 Mindset

Financial psychology is about how you behave around your money. It covers topics such as where you learn about money, wants versus needs, how you form relationships and develop new relationship with money, your willingness to change, and connecting your life goals to your money to name a few. Take a personal inventory. If you have not reviewed this information in more than a year, it’s a good idea to take a refresher course.

#2 Savings & Budgeting

At Money Smart Education we use the Money Smart Allocation System in place of savings & budgeting. While the Money Smart Allocation System goes far beyond savings & budgeting, the core of it is similar. This area covers your ability to manage your monthly cash flow and save for your short-term and long-term goals. A good rule of thumb is that you should have at least six months of living expenses set aside and be capable of managing your income and expenses as things change. If you are unable to make headway here it’s good to go a step beyond learning and meet with a personal finance coach or wealth mentor so that you can have stability in your finances.

#3 Account Management

Managing your banking accounts and automating payments is complimentary to managing your monthly cash flow. This area goes beyond account management covering research and evaluation of different banks so that you can choose one that best suits your needs. If you are not familiar with this area, taking a class can help you make choices that better align with your goals.

#4 Loans & Debt

Analyzing and evaluating loans as well as understanding the short and long-term consequences associated with debt are core components of personal financial management. Many times, it is undesirable results from an inability to save, unhealthy behaviors around money, inability to increase income, and inadequate insurance that contribute to excess debt. While this area covers how to make a plan to pay down debt, it is important to address the areas that lead to taking on debt. For challenges like this, it is good to consult a personal finance coach or wealth mentor to avoid past mistakes.

#5 Credit Profile

Understanding how to build a good credit history, review your credit reports, and increase your FICO and Vantage scores are some of the most popular topics in personal financial management. The rules around credit change over time so it is important to review annually.

#6 Income & Career Planning

Income is important if you plan to live comfortably. While many financial education courses focus on reinforcing multiple sources of income to support financial stability, it is important to go beyond career planning. Are you able to balance the value of a compensation package along with your pay? If you are a little rusty on this topic, taking a class is a good option.

#7 Insurance

Understanding the several types of insurance available and how they impact your life is an important part of personal financial management. If you have not covered this topic in depth, it is a good idea to take a class.

#8 Taxes

Being able to accurately determine how much of your income is going to taxes will help you plan your finances. If you are not sure how to do this, taking a class will help.

#9 Investing

There is a lot that goes in the topic of investing. Understanding how to analyze and evaluate individual retirement accounts as well as make sound investment decisions are both important factors. If you find that your investments are underperforming, taking classes, and communicating with a team of financial advisors, coaches, and mentors can help you improve.

Final Thoughts

So, there you have it. Problems in areas like insurance, income, Money Smart Allocation System, and mindset can lead to bigger problems with loans and debt. Credit, taxes, investing, and account management were also covered. If you have not addressed these areas of personal finance in a formal education setting, make this year an opportunity to build your personal financial management skills!

by MSE Staff | Published 15 Feb 2022 

As the 2021 tax filing deadline rapidly approaches, individuals and families alike are starting to think about their taxes. In this blog post, we will explore four major areas of taxes for personal finances: tax liability, taxable income, tax credits, and tax deductions. Each of these concepts is important to understand in order to make the most of your short-term and long-term financial planning. Keep in mind that this information is specific to individuals living in the United States; other countries may have different rules and regulations when it comes to taxation.

Tax Liability:

Your tax liability is the amount of money you actually owe in taxes for a given year. It's calculated by taking your taxable income and subtracting any applicable credits or deductions. If this number ends up being less than zero, then you will receive a refund from the IRS instead of paying more in taxes.

Taxable Income:

This is the amount of income that is subject to taxation. It's calculated by adding up all of your taxable sources of income and then subtracting any applicable exemptions or deductions.

Tax Credits:

Tax credits are a dollar-for-dollar reduction in your tax liability, and they can be claimed for a variety of reasons such as having children under the age of 18 or paying someone to take care of them while you're at work. There are three types: refundable, non-refundable, and partially refundable credits which we'll discuss below.

Refundable Credits - If your tax liability is less than $0 because these credits exceed your taxable income, then some portion (or all) will be paid to you as a refund.

Non-Refundable Credits - These credits can only be used to reduce your tax liability down to $0; any excess amount is not refunded to you.

Partially Refundable Credits - If your tax liability is less than $0 before because a portion of these credits exceeds your taxable income, that portion may be refunded up to a specified amount of the remaining credit.

Tax Deductions:

Tax deductions are expenses that you can subtract from your taxable income in order to lower your tax bill. There are two types of deductions: standard and itemized.

Standard Deduction - This is a fixed amount that everyone gets by default without having to provide any additional documentation or information about their finances/spending habits.

Itemized Deductions - These are expenses you have incurred over the course of the year which may be deducted from taxable income if they meet certain criteria. These expenses include things like mortgage interest payments or charitable donations, among others. Sometimes the total amount of itemized deductions doesn't exceed the standard deduction. It's important to hire a tax preparer you can trust to avoid overpaying taxes.

Final Thoughts

In sum, it's important to understand these four major concepts of taxes in order to make the most informed financial decisions for your future. Consult with a tax preparer if you have any questions about how these concepts apply to your unique situation; they can help you save money and avoid penalties from the IRS. Thanks for reading!

by MSE Staff | Published 6 Feb 2022 

When you take a personal finance class, you gain a lot of knowledge about financial planning and money management. However, learning doesn't stop there! There are many ways for you to continue learning about personal finance after taking a class. In this blog post, we will discuss five of them. Keep reading to learn more!

Read Books That Further Your Curiosity About Personal Finance

One great way to continue learning about personal finance is by reading books on the topic. There are many different personal finance books out there, and each one offers something unique. If you have a specific interest in personal finance, such as developing stock analysis skills or building good credit, then find a book that focuses on that particular topic. By reading books on personal finance, you'll be able to gain a more in-depth understanding of the topic.

Join A Group That Focuses on Honing Personal Finance Skills

Another way to continue learning about personal finance is by joining a personal finance group. You can find personal finance groups on Facebook or in your local community. These groups allow you to ask questions and get answers from other people who are interested in personal finance topics like money allocation, wealth protection, debt reduction, and focusing on goals to name a few. By participating in well-moderated and focused groups with other people, you'll be able to learn new things and get tips on how to improve your personal finance skills.

Attend Webinars or Watch Online Tutorials

If you're looking for personal finance resources that are bite-sized and easy to consume, then consider attending webinars or watching personal finance tutorials online. Webinars and personal finance tutorials can be found on YouTube, Udemy, Skillshare, LinkedIn Learning, or many other platforms dedicated solely to personal education topics like managing your personal accounts. Many personal finance webinars and tutorials are free, or you can pay a small fee to access them.

Talk to a Personal Finance Coach

If you want to take your personal finance education to the next level, consider talking to a certified personal finance coach. A certified personal finance coach can help you create and achieve financial goals, develop a budget that works for you, and learn how to save money. Personal finance coaches come from many different backgrounds - some are CPAs, others are personal investors, and many more have personal finance degrees. Certified personal finance coaches are also available online, so you can find one that fits your needs no matter where you live or work!

Take Another Personal Finance Class!

The best way to continue learning about personal finance is by taking a follow-up personal finance class. This time, try to find one that is more specific to what you want to learn. For example, if you're interested in real estate investing, then look for a personal finance class that focuses on that topic. By taking multiple personal finance classes, you'll be able to gain a more well-rounded understanding of the topic and learn about different aspects of personal finance.

Final Thoughts

Learning personal finance is an ongoing process. Even when you've taken a personal finance class, there will always be more to learn and new ways for you to improve your financial literacy! Keep learning by reading personal finance books, joining personal finance groups online or in person, attending webinars and tutorials on the topic, talking with a personal finance coach, and taking additional personal finance classes. These are all great ways to continue honing your personal finance skills so you can be successful in managing your money now and in the future!

by MSE Staff | Published 14 Nov 2021 

What's the difference between Money Smart Transformation and Money Smart Pivot? Is one better than the other? This article will explain what each program is about, how they are different, and which might be best for you.

A Plan for Positive Change

Both programs are designed to help you understand your finances and develop a plan for positive change. The main purpose of both is to teach skills so that people can better manage their money today. So, which is right for you?

Your Schedule

Money Smart Transformation vs Money Smart Pivot

Both Money Smart Transformation and Pivot are designed to fit the busy day for working professionals. Implementation classes and group mentoring sessions take place during the evening on Wednesdays and intensive live classes happen on Saturdays at the end of the month. Implementation and group mentoring sessions are typically 2-hour sessions. Intensive live classes are typically 10-hour classes. While participation is key to making progress in both programs, Curtis provides a recording of class sessions so that you can review. Money Smart Pivot members also have access to two private mentoring sessions with Curtis Banks every month.

Think about what your life looks like. Are you able to commit 2-3 hours per week building a brighter financial future? Are you able to commit to evening classes on Wednesdays? Are you able to commit to an intensive live class at least once a year?

Curriculum

Working Professionals vs Entrepreneurs

Curtis' programs are meant to provide you with financial education and wealth mentoring so that you can build wealth. Money Smart Transformation guides working professionals to take action in their finances and create sources of passive and investment income. Once someone reaches the point in their finances where they are generating passive income or business income alongside their earned income, Curtis recommends Money Smart Pivot. Pivot continues to provide financial education and includes 1-on-1 wealth mentoring. Curtis believes 1-on-1 mentoring is important for entrepreneurs because it provides time to focus on your business and life goals.

Length of Program

Transformation vs Pivot

Your success in either program is dependent upon the goals you set, the effort you put into achieving your goals, and external factors. Regardless, both programs will help you as long as you stay the course. Ideally, Money Smart Transformation is a 12–14-month program that ends with members reaching a higher level of financial wellbeing and income security. The curriculum for Money Smart Pivot continues after transformation graduates move on to generating passive income or business income alongside earned income.

Which Is Right for You?

We all want to be financially successful, but it's hard work. It takes time and dedication to learn the skills needed for success in this area of our lives. You can't just wing it or hope that you figure things out on your own because these are important steps in life - ones that should not be taken lightly! Which program would best suit your needs? Give us a call today so we can get more information about what you're looking for and see if there is any way we could help.

by MSE Staff | Published 13 Nov 2021 

The financial world is complicated and many of us need guidance when it comes to our finances. A financial educator provides education on personal finance topics. A financial coach will work one-on-one with clients to help them set goals and devise strategies for achieving these goals. Wealth mentors guide clients through all aspects of accumulating wealth, including identifying sources of income and developing ways to save money on taxes. This article will explore the differences between these three professionals so that you can make an informed decision on which one is right for you!

Note: this article uses a fictional characters and fictional events to help distinguish the differences between a financial educator, financial coach, and wealth mentor.

Casey's Story

Casey is in her 20s, fresh out of college. She has landed a job with decent pay and wants to establish good financial habits now so that she can live comfortably in retirement. The problem is that Casey doesn't know much about personal finance; this makes it difficult for her to self-advocate when purchasing services or negotiating salary.

Casey has decided to meet with a finance coach

Casey's Financial Coach: A financial coach helps people set and achieve personal finance goals, such as buying a home or paying for college tuition fees. Casey's goal is to establish good financial habits so that she can live comfortably in retirement. Her coach will help her identify her values when it comes to money, set financial goals that are meaningful to her, and devise a realistic plan for achieving these goals.

Benji's Story

Benji is in his 40s and is experiencing identity theft for the 5th time this year. The impact this is having on his credit and financial security are starting to wear down Benji's self-esteem. The problem is that Benji has not taken a financial literacy course since he was in college and things have changed considerably; this makes it a challenge for Benji to take the appropriate actions to prevent and protect against identity theft.

Benji has decided to meet with a financial educator

Benji's Financial Educator: A financial educator helps people of all ages and backgrounds become financially capable. They can teach you how to avoid identity theft, create a budget that works for your lifestyle, manage your finances for success, and invest in the right places so that you can retire comfortably one day. Benji needs help understanding why he is being targeted by cybercriminals and how to stop it from happening again. He also wants help understanding exactly what identity theft is and why he should be concerned about it.

Cindy's Story

Cindy is in her 60s and has recently retired after a 30-year career as an elementary school teacher. She had been planning for retirement all throughout her life; however, she now realizes that her money philosophy is not very different from how it was when she first started working.

Cindy has decided to meet with a wealth mentor

Cindy's Wealth Mentor: A wealth mentor guides their clients through all aspects of becoming wealthy including identifying sources of income and developing ways to save money on taxes. They can help you plan for retirement, create financial goals that are meaningful to you, and devise a realistic strategy for achieving these goals. Since Cindy currently has few sources of income or wealth accumulation strategies in place, her wealth mentor will work with her to identify what might be holding her back from becoming financially secure, so she'll know how best to move forward.

Which Is Right for You?

Making the world of finance more accessible for everyone is a goal that’s very near and dear to my heart. Curtis knows how important it can be to have someone there by your side as you embark on this journey. The financial educator educates, the financial coach provides hands-on support, and the wealth mentor guides clients through all stages of accumulating wealth. Which one makes sense for you? Why not sign up today for a free discovery session with Curtis banks!

by MSE Staff | Published 7 Nov 2021 

The Definition of Income

Income is the money you bring in, but that's not all! There are a variety of different types of income and near limitless ways to create streams of it. The number of income sources you maintain have a direct impact on your financial security and peace of mind.

The different types of income include

Earned Income: 

Income you earn from employment and includes your salary, bonuses, tips and commissions. It also refers to any income earned doing odd jobs or freelance work on the side such as babysitting or selling unused items online.

Passive Income:

Income you earn from assets such as rental properties. It also includes income earned through royalties for creative works like songs, movies and books.

Investment Income:

Income earned from investments such as dividends, interest or capital gains on your investments.

These income sources can all be classified as income and contribute to your overall financial wellbeing. However, it's important you know how each income stream is taxed so that the correct taxes are applied at the right times. Consulting with a tax planner to avoid overpaying in taxes is an excellent strategy to maximize your income.

Finances can be a huge source of stress and worry. But it doesn't have to be! There are many different types of income, and near limitless ways to create streams of money that will help you build the financial security and peace of mind you deserve. If we've piqued your interest in this subject matter, don't hesitate to book a free discovery session with Curtis Banks today. You and Curtis will work together so that you can feel confident about your future – both financially AND emotionally!

by MSE Staff | Published 6 Nov 2021 

Managing your money can be a challenge. It is not always easy to stay on top of the daily tasks that are required for managing your wealth. Curtis Banks, Wealth Mentor and Financial Educator, shares his Managing Money Tips with readers in order to help them manage their finances better. For those who want to build wealth, this article will give you some great tips that will help you get there faster!

Money Tip #1: Personal Development

Your ability to make sound financial decisions depends heavily on your financial knowledge and skills. This is known as your financial capability. A big part of your financial capability is your personal development. This includes things like improving your knowledge about finance, learning new skills and building better habits that will lead you to success in the long run.

Money Tip #2: Schedule Time to Review Your Accounts

Imagine you're reviewing your bank statement for the first time in over 6 months, and you notice that fraudulent charges started occurring 4 months ago. You promptly place the account on hold and attempt to get your money back. However, you may not get any of your money back if you report it beyond the 60-day limit according to the FDIC. This reporting timeline may change from country to country. However, it's important to review your accounts well within that timeline. There are a plethora of free calendar apps available that you can use to set reminders. Carve out time and honor it. Review your accounts regularly for accuracy.

Money Tip #3: Automate Your Money Management System

You've created a money management plan using Curtis Banks' Money Smart Allocation System. Depending on the payment options provided by your employer you may be able to have a portion of your income automatically deposited to meet your savings goals. As for your banking institutions, they may offer automatic transfers and automatic bill payment. All of these tools are useful in helping you manage your money and avoid fees.

Money Tip #4: Wealth Mentor (Your Team)

Managing money tips are an excellent resource for building financial awareness. They provide broad educational benefit to readers. A wealth mentor goes above and beyond providing education and resources specific to your individual needs. Because a wealth mentor is someone who has accomplished what you have set out to achieve, a wealth mentor is an indispensable member in your team of experts.

Have you identified who your wealth mentor could be? Curtis Banks has mentored tons of people on how to build wealth. If building wealth is one of your goals, feel free to book a discovery session to learn more about working with Curtis Banks.

Money Tip #5: Payoff Credit Cards Monthly

Curtis recommends that you pay off your credit cards every month to avoid carrying over a balance. This is an important strategy to avoid paying more and more money on interest. By paying off your credit cards every month you're freeing up money for growth opportunities. Additionally, keep each credit card balance within 25% of their credit limit and do not exceed 25% of your total credit limit. Your utilized credit shows up on your credit report and ultimately affects your credit score.

Money Tip #6: Have Adequate Insurance

Insurance is meant to protect you from financial hardship when pre-defined conditions occur. Insurance is a financial product with a variety of options in the marketplace. There are a variety of insurance products ranging from unemployment to healthcare and beyond to help reimburse you. Be a savvy shopper. Shop around for products that offer you an adequate amount of protection at an optimal price. Revisit your plan periodically to ensure that you're getting the best coverage and the best rates.

Money Tip #7: Buy Cash Producing Assets (Passive Income)

Do you plan to work forever? While the type of assets you purchase to grow your net worth should align with your financial goals, it's important to focus on assets that pay you in addition to growing in value. The benefits of cash producing assets have a snowball effect as you buy more and more. It is possible to replace earned income with income from cash producing assets. This can translate to more freedom to pursue other passions you have. Talk to your team of advisors and make a plan for passive income.

Money Tip #8: Grow Your Network

It's said that we are the sum of our social circle. Growing your network of mentors and mentees aids in the personal development of you and those around you. Don't limit yourself by being an island, look outside your immediate circle and expand on the wealth around you so it can be passed down to the next generation.

Money Tip #9: Leverage Tax Deductions

Working with a credible tax advisor and tax preparer can help you keep more of the money you make. Curtis Banks says that it's important to plan ahead and keep a record of deductible transactions. It's important to note that every tax situation is different. Please consult with your team of experts on how this applies to you and your unique financial goals.

Money Tip #10: Be A Savvy Shopper

Curtis says that being a savvy shopper is an important money management tip. Chances are the thing that you’re interested in purchasing is available at a better price from another seller. Comparing prices can save you money. Finally, be patient when shopping. The things you want to buy will still be there in a few days or weeks if you’re willing to wait for the price to go down.

We hope that you have found this article helpful in your journey to better manage your finances. If you want help from a wealth mentor who understands the challenges of managing money, we invite you to book a free discovery session with Curtis Banks. He is looking forward to meeting with you and helping make it easier for all those who are seeking financial freedom!

by MSE Staff | Published 1 Aug 2021 (Updated 5 Nov 2021)

There’s no denying that 2020 drastically reshaped everyone’s lives. Much like The Great Depression and Great Recession, we are in the midst of a generation defining event. The pandemic has drastically reshaped how many people define financial wellbeing. It has also changed the way people handle their money. Thanks to a survey “conducted by The Harris Poll on behalf of Empower Retirement and Personal Capital from March 23, 2021 to April 5, 2021 among 2,005 respondents,” we now have more clarity on how the pandemic has reshaped our lives (1 p. 32).

Rethinking Financial Wellbeing

How do you define financial wellbeing? Would you say that it’s about making at least $75,000 per year in your career? Or, would you say that it’s about having an individual retirement account?

The Consumer Financial Protection Bureau (CFPB) spent over 60 hours interviewing people to get a solid idea of what it means to be financially well for their 2015 report. The CFPB found that to be financially well, you:

• “Have control over day-to-day, month-to-month finances;
• Have the capacity to absorb a financial shock;
• Are on track to meet your financial goals; and
• Have the financial freedom to make the choices that allow you to enjoy life” (2 p. 5).

While these four parts express it well, Personal Capital’s 2021 report shows that the meaning of financial wellbeing changes. The meaning of financial wellbeing changes for each of us depending on life events and our life stages.

Americans today define financial health based on “the links between financial matters and other parts of life” (1 p. 7). That’s a groundbreaking discovery! Americans see financial wellbeing as having holistic financial stability in pursuit of a better quality of life. This is a big departure from viewing financial wellbeing as a monetary milestone. The pandemic has brought life-domains to the forefront of financial wellness.

How does your financial state impact your different areas of life? We know that answer changes depending on your life events and life stage. And, the meaning of financial stability is different for you when you’re 20 years old with no dependents than it is when you’re 50 years old with dependents. The importance of our life domains wax and wane throughout our lives. For example, establishing a career is more important to someone who’s younger than someone who’s getting ready to retire. This report really highlights how people are more aware of financial wellness than many experts have given credit for.

Barriers to Financial Wellbeing

Pull anyone aside and ask them what areas of life are most important to them and they will tell you. However, financial stability and these life domains can have complimentary and detrimental interactions between one another. A lack of financial stability is a detrimental interaction flowing out of your finances and into different aspects of your life. A great example of this is having your hours cut at work and not having money set aside to weather the storm. The reduction in income is sure to impact your non-essential spending first. That may manifest as switching to cheaper food, making adjustments to family outings, or carpooling, etc. Financial stability plays a major role in our financial wellbeing.

The most prevalent barriers to financial wellbeing were not getting paid enough, expenses piling on, and an inability to save (1 p. 24). The math is easy to get behind. When you have more money going out than coming in, you have poor cash flow. An inability to resolve this challenge only causes more pain points like not being able to save and sinking deeper into debt. These are hallmark symptoms of financial instability. Let’s look at how people are adapting.

How The Pandemic Changed Money Habits

Many people reported cutting back on non-essential items, focusing on saving, and thinking about financial planning more often. Much like the Great Depression, many people are becoming more frugal in response to the economic turmoil. Financial stability has become a very attractive lifestyle choice among Gen Z, Millennials, and Gen X. Stability and financial security are more important now than ever (1 p. 13).

However, a closer look reveals that Americans perceived financial literacy as the least important factor to good financial health. The two most important factors Americans perceived for good financial health were having enough to pay their bills and having enough money in their accounts (1 p. 17). It’s important to point out that there is a positive correlation between being financially literate and having financial stability. This is because people who are financially literate are able to demonstrate the capability to make sound financial decisions.

Financial Education & Wealth Mentoring

Financial Education is an important step in developing behaviors that produce financial stability and ultimately your financial wellbeing. This is why those who are financially literate have much better odds of recovering from a financial setback. Achieving financial stability and financial wellbeing gets even easier to achieve when you have a mentor in your corner. Boost your financial growth with expert support at your fingertips.

I offer unique programs and systems for building wealth. Speak to a real person that’s attentive to your needs in the classroom. With Zoom-based sessions, I can answer your questions in the class. Realize your own system for building wealth with Money Smart tools to guide you. Demonstrating your financial capability becomes much easier when you have the right tools and guidance. Plus you can take on your biggest financial goals with a private mentor at your side.

References

1. Personal Capital, an Empower Company. The Journey Toward Financial Freedom: How Americans define financial wellbeing, how they get there and what stands in their way. s.l. : Empower Retirement, 2021.

2. CFPB. Financial Well-being: The Goal of Financial Education. s.l. : Consumer Financial Protection Bureau, 2015.