Wealthy vs Financial Fit. Here’s the Difference and Why It Matters

What is the difference between being wealthy and financially fit? Someone could be wealthy without being "financially fit". Read this blog post from Life Happens to learn more about the difference.


People can be wealthy without being financially fit, meaning they can have a lot of assets or money tied up in assets, but those assets aren’t “liquid.” Let me explain. Say you have a house that has escalated in value in the real estate market. You may have this large asset, but that doesn’t necessarily mean you’re financially comfortable from an income standpoint. You aren’t able to tap into that “wealth” to pay for your day-to-day expenses.

Considering Risk

The overall goal when I sit down with someone, or perhaps a couple, is to determine their wants and needs, and then give them a plan that helps them grow their assets, while achieving their income goals.

But one thing many people fail to look at is the risk during this growth period. Let’s say you’re married, and again your major asset is your home, perhaps even with a large mortgage. What if something were to happen to either one of you? Would you still be able to pay the mortgage and retain the house? Or would you need to sell your largest asset just to pay day-to-day living expenses?

That’s where life insurance comes in as a foundational piece to financial fitness. It addresses the issue of someone dying too soon—that’s a risk factor you don’t want to leave chance. And the truth is, it’s an affordable solution for almost everyone. A healthy 30-year-old can get a 20-year $250,000 level term life insurance policy for about $13 a month. Most of us can afford to find that kind of money in our budget.

What Do Romantic Partners Want?

Life Happens did the survey, “What Do Romantic Partners Want?” and we discovered some great news for most of us—people prefer a partner who is financially fit (64%) over someone who is wealthy (16%). And we explored a whole host of factors, from looks to money to relationships. And I think it’s only natural that when people are dating, all the factors that we explored in the survey come into play.

It’s when things become serious and you’re looking to settle down that you have to start asking some of the tougher questions, questions that may make you feel uncomfortable. For example, does the other person have a lot of debt or other financial obligations?

Remember, if you marry and sign on the dotted line, you become responsible for each other’s debt. I’ve seen divorces happen where one partner was racking up a huge amount of credit card debt without the other one knowing, and then in the divorce proceedings the other partner finds out that they are responsible for half that debt.

In the end, it comes down to being financially aware, asking the appropriate questions, even if they are uncomfortable ones. You need to go into a long-term relationship with your eyes and ears wide open.

SOURCE: Feldman, M. (5 June 2018) "Wealthy vs Financial Fit. Here’s the Difference and Why It Matters" (Web Blog Post). Retrieved from https://lifehappens.org/blog/wealthy-vs-financial-fit-heres-the-difference-and-why-it-matters/


Financial Fitness Benefits Take Center Stage as Debt Worries Grow

According to speakers from the Society for Human Resource Management 2019 Annual Conference & Exposition, employees who are taking advantage of financial health benefits have less stress, reduced distraction and lower absenteeism. Read this blog post for more on financial fitness benefits.


LAS VEGAS—Employers that help workers improve their financial health are seeing increased productivity, job satisfaction and retention. Employees taking advantage of these benefits have less stress, reduced distraction and lower absenteeism, according to speakers at the Society for Human Resource Management 2019 Annual Conference & Exposition.

"Your employees are financially stressed, and it's affecting your business," said Dan Macklin, CEO of Salary Finance, a financial technology firm, during a June 24 panel discussion on financial wellness benefits. A survey conducted by his firm, with responses from 10,484 U.S. employees, found that 48 percent were worried or stressed about their finances. Financially stressed employees lost nearly one month of productive workdays per year.

Money management problems exist across all income levels, Macklin noted.

"Financial worries are the No. 1 cause of employee stress," said Kent Allison, national leader for employee financial education and wellness at PwC. The consultancy's 2019 Employee Financial Wellness Survey, with responses from 1,686 full-time employees, showed that 59 percent cited financial or money matters as their chief source of stress, followed by their job (15 percent) and relationships.

Nearly half (49 percent) of all employees said they find it difficult to meet household expenses on time each month, PwC found.

"Employees are seeking personalized financial guidance and coaching," Allison said. "Successful financial wellness programs find the optimal way to combine technology and human interaction" to help employees get back on track financially.

Organizations are more likely to thrive when they help employees "bring their healthiest and happiest self to work," said Felicia Cheng, wellness benefits program manager at HR technology firm SalesForce.

Organizations are more likely to thrive when they help employees 'bring their healthiest and happiest self to work.'

Have meaningful conversations with employees, said Wendy Myers Cambor, Northeast U.S. HR leader at consulting firm Accenture. "Ask what they want, what they need and how we might be in a position to accommodate them."

Accenture, like many companies, has five generations of employees in its workforce, whose concerns range from "managing student debt and affording to have a child and buy a home, to helping to care and provide for aging parents while preparing for their own retirement," Cambor noted.

Physical wellness and financial wellness are deeply interrelated, said Allison, because financial distress can lead to health distress.

Similar to health risk assessments, he said, financial wellness assessments can be helpful because "how can you change behaviors if you don't know what these behaviors are?" He advised, "Assess employees to know where they are financially and what their needs are, and what behaviors they may need to change."

Financial health assessments could be stymied if employees don't feel comfortable revealing their distress—and don't trust their employers with this information, panelists noted. Cheng said it was important to help employees overcome taboos around admitting to money problems, because, if employers don't understand the scope of the challenges their employees face, they can't provide the help that employees need.

Macklin noted that younger workers seem more willing to discuss their financial difficulties and are grateful for the guidance and assistance employers provide.

Younger workers seem more willing to discuss their financial difficulties and are grateful for the assistance employers provide.

"Engage employees at the right time to provide help when needed," Allison suggested.

"People are suffering," Cambor said. "There are opportunities for HR to make a difference in peoples' lives."

"Employees' stories are powerful," Cheng said. HR should "bring them to the leadership team, coupled with data on the positive impact of financial wellness," to make the case for financial wellness benefits.

Student Loan Benefits Are in Demand

Student loan debt affects employees at all stages of their careers, said Kevin Fudge, director of consumer advocacy at American Student Assistance, a nonprofit that helps students manage their education debt, during a June 25 conference session.

He noted that more than 3 million Americans ages 60 and older currently owe more than $86 billion in unpaid student loans, according to the Consumer Financial Protection Bureau.

Employees face different concerns at different career stages, Fudge pointed out, including:

  • Early career: Paying off student loans and related debt.
  • Mid-career: Supporting a family and saving for children's college education.
  • Late career: Helping children and grandchildren by co-signing loans and preparing for retirement.

Fudge pointed to innovative ways employers are helping with student loans. For instance:

  • Abbott Laboratories allows employees to save for retirement and pay down their student loans. If an employee is paying off student loans (using 2 percent or more of their pay), Abbott will put the equivalent of 5 percent of the employee's pay into his or her 401(k) account.
    Abbott received a private letter ruling from the IRS to allow this practice. The IRS is expected to sanction similar plans with broader guidance. Legislation has also been introduced to allow this practice.

In a June 24 conference session on student loan benefits, Meera Oliva, chief marketing officer at Gradifi, a loan benefits administrator; Jane Fontaine, senior vice president of HR at Digital Federal Credit Union; and Chad Carter, vice president of benefits at Fareway Stores, shared these examples, showing the range of student loan aid employers are providing:

  • AECOM, a Fortune 500 engineering firm, offers student loan refinancing along with student loan counseling and financial wellness content.
  • Carvana, an e-commerce platform for buying cars, offers up to $1,000 per year to help full-time employees pay off their student loans.
  • Connelly Partners, a Boston-based advertising agency, offers a total benefit of $10,000 with contributions starting at $100 a month for the first year and then increasing $25 a month for the next four years. In another effort to retain employees, the firm gives a $1,000 retention bonus at the end of the fifth year of employment.
  • Sotheby's, an auction house and private sales firm, offers $150 per month contribution toward student loans indefinitely until employees are no longer in debt, including parents who have taken on debt for their children.
2019 Student loan graph.png

SOURCE: Miller, S. (27 June 2019) "Financial Fitness Benefits Take Center Stage as Debt Worries Grow" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/financial-fitness-benefits-take-center-stage.aspx


No Gym Required for These (Financial) Fitness Tips

While getting "healthy and fit" is important, it's also important to be concerned about your financial fitness. Read this blog post for tips to stay financially fit at any age.


If you’re like me, your social media feeds are jammed with headlines about getting “healthy and fit” in the new year. Of course, they’re referring to diet and exercise and common resolutions to drop pounds and work out more often.

But it’s just as important to be concerned about your financial fitness—where you can also drop some baggage and get some strength training without going near a gym. (In fact, if you have a subscription to a gym membership but aren’t going, that’s one financial fix you can make right now.)

Here are some tips to consider for any age:

IN YOUR 20s:

Workout: Have a portion of each paycheck deposited into your savings account, or take advantage of bank programs that “round up” or have other automated savings features. Trust me, you won’t feel this burn.

Diet: Start making coffee at home or at the office instead of going for expensive lattes. Fewer calories, and more money in your pocket. This is a good time to consider getting life insurance (whether you are single or attached) as it is less expensive the younger and healthier you are.

You also need to consider disability insurance, which pays you a portion of your salary if you are sick or injured and unable to work—because who would pay your bills if you couldn’t? Your work may offer this as an employee benefit, so check with your HR department to find out if you have it and what it covers (short-term, long-term disability, etc.)

IN YOUR 30s:

Workout: You probably have a retirement program at work or some other preliminary retirement planning in place. If you don’t, start.

If you do, why not increase the amount you divert into retirement by a percentage point each year—equaling your company match percentage, if they have it, is a good target.

Diet: You may not have gotten life insurance beyond what you have through your workplace, but now is the time to consider an individual policy that you own. Remember, when you leave a job, you typically lose that life insurance offered through your workplace. And, given that life insurance through the workplace usually equals one or two times you salary (or a set amount like $50,000), it’s no longer going to cut it if you have a growing family.

If money’s tight, as it often is with a growing family, lingering student loans, and perhaps a mortgage, a term life insurance policy can protect you through the lean years. But don’t overlook the long-term benefits of a permanent life insurance policy. The cash value can be tapped later for needs that may arise. Plus, there’s nothing that says you can’t have a combination of both.

Also, consider an individual disability insurance policy that you personally own and follows you throughout your career. If you’re relying on work coverage, know that it goes away when you leave that job, and often these policies have bare-bones coverage.

IN YOUR 40s:

Workout: Do you have a financial professional helping you out? Navigating the ins and outs of a growing investment portfolio can be tricky as you move through your career and want to use traditional or Roth IRAs, and the tax benefits of various planning strategies. This may also be the time that you can add a permanent life insurance policy, if you haven’t before, which allows you to accrue cash value and obtain benefits that extend later into your life.

Diet: If you’re still carrying extra debt at this point, it’s time to get that paid down. Tackle higher-interest debts first, and celebrate each paid-off card or loan with … a bigger payment to the next one on the list.

IN YOUR 50s:

Workout: Max out your retirement contributions, especially once your kids are through college. This is also a good time to start researching things like long-term care insurance, and to make sure that your investment portfolio is built in such a way that you can reach your goals.

Diet: It may be very tempting to take on a new debt now: some folks want a vacation home, or the time may be right to start a business. But beware of any super-risky moves that can spell catastrophe with limited time to recoup losses, or that leave you with unexpected bills.

IN YOUR 60s and beyond:

Workout: Evaluate your Social Security situation against your retirement portfolio to determine the best time to retire. Understand the “living benefits” of your life insurance policies and how annuities may help you create a retirement income stream that you can’t outlive.

Diet: Is it time to downsize? It can be hard letting go of “stuff” so that you can go from that four-bedroom house to a two-bedroom condo. But the financial benefit of doing so may surprise you—plus there is less to clean and take care of (not to mention the ease of jetting off at a moment’s notice with no need for someone to look after your home.)

A lot depends on factors like your relationship status, your career path, whether you have kids or not, and what your long-term goals are, and these can change at any time in our lives.

The long and short of it is that just as when it comes to “health and fitness” goals, you’d get an annual physical. Need to know if you’re financially fit? Talk to an insurance professional or financial advisor today.

SOURCE: Mosher, H. (10 January 2019) "No Gym Required for These (Financial) Fitness Tips" (Web Blog Post). Retrieved from https://lifehappens.org/blog/no-gym-required-for-these-financial-fitness-tips/