Financial Well-being linked to Financial Literacy

Financial well-being includes balancing income and expenses, staying out of debt, and saving for the future.  Financial wellbeing also means having a healthy relationship with money.  As evidenced by the increase in credit card debt, foreclosures and bankruptcies achieving a high level of financial wellbeing is challenging for a number of Americans. In addition, the demands associated with financial well-being is impacting the emotional state of Americans. Many adults report one of the greatest sources of stress in their lives is their personal finances. A few basic, however key, concepts associated with high levels of financial well-being include learn to budget, be wary of credit cards, get out of debt, and start saving. 

In order to improve financial well-being, it is important to increase financial literacy. Financial Literacy is a person’s ability to live within their means and manage money in a manner that is comfortable.  The US government established the Financial Literacy and Education Commission (FLEC) to help Americans enhance financial literacy.  As a part of their efforts, FLEC created MyMoney.gov.   MyMoney.gov is a website that identifies resources which help consumers learn how to save, invest and manage money better.  According to FLEC there are five building blocks to consider when managing finances and planning for the future. The five building blocks include:

  1. Earn-  A detailed understanding of pay and benefits
  2. Save and Invest – Saving during every chapter of life is important
  3. Protect – Precautions to protect financial situations
  4. Spend – Budget and use money wisely
  5. Borrow -  Consider credit history and borrow wisely

Knowledge of each of these building blocks is associated with increasing levels of financial literacy.  By enhancing Financial Literacy Americans can improve financial well-being.  Thus, reducing the stress financial concerns can create.