Financial health vs. financial wellness—are they the same?

As many as 86% of Americans believe financial health and financial wellness are one and the same—when they are actually quite different.1 Among the 14% who believe there is a difference, they tend to see “health” as a current state and “wellness” as a process to achieve that state.1 By understanding the connection between the two, we can help employees gain clarity in their financial lives.

Financial health (or financial well-being) is the financial stability gained from being able to balance living expenses with the financial freedom to live as one chooses. Generally, people who are financially healthy have low debt, adequate savings and are on track with their retirement goals.

Financial wellness, on the other hand, is the journey toward financial health. It’s understanding and employing responsible financial behaviors such as budgeting, saving, investing and keeping debt low. Cultivating financial wellness skills can help employees gain a sense of confidence and control that may ultimately lead to the goal of financial health.

What’s more, when employees are in a position to cover daily expenses as well as unexpected financial emergencies, the resulting feeling of financial security can help foster greater emotional security. A person’s financial state can also be self-perpetuating—as it is more likely for finances to improve if someone feels they are already “good” and worsen if they feel they are already “bad.”1

Helping employees achieve a positive financial mindset may fuel their financial growth.

The current financial health landscape

Recent data suggests that many Americans are far from achieving a savings goal that mirrors financial health. For example, about half of Americans have held a credit card balance due to an emergency expense they weren’t able to pay for, and three in five have less than $10,000 in liquid savings.2 This is especially true of Gen Z who tend to follow a pattern of “soft saving,” or prioritizing paying for current experiences over saving for the future.3

About half of Americans have held a credit card balance due to an emergency expense2

Three in five have less than $10,000 in liquid savings2

Trends like these could indicate that financial wellness skills are not as developed as they could be. Employers can play a pivotal role in providing access to education and guidance that can support employees on their financial journey toward future financial health.

Key takeaways

  • Consider offering financial tools and education to help employees more easily balance today’s expenses with saving for the future. Our Events Center offers a full calendar of educational events that we encourage you to promote to your employees.
  • Educate younger generations on the value of reducing immediate spending and redirecting that money into savings for their future. Be sure to include information about the power of compounding interest over time.
  • Keep communications short, clear and relevant. Provide specific action steps employees can take.

Bank of America Proprietary Market Landscape Insights, January 2024. Surveys conducted among general consumers (clients and prospective clients).

CNBC, “Here’s why even Americans making more than $100,000 live paycheck to paycheck,” December 2023.

CNBC, “Retirement is overrated, Gen Z says, as ‘soft saving’ trend takes hold,” November 2023.