Financial Wellness: The Emperor of quality life
-By Darren Smith
Lockdowns, restriction of our freedom, and heightened uncertainty have reminded us how critical financial wellness is to our quality of life, what we can achieve and our mental health. For those that have strong confidence, are prepared financially and have the appropriate mindset and resources, the burden of the current uncertainties are reduced and focus turns to the growth opportunities that are emerging.
Business owners and employers are very aware of what it takes to maintain and run a successful business. Many are being tested by the current circumstances and are needing to adapt or risk becoming less relevant. Ignoring or not focusing on the critical success elements leads to poor performance and ultimately failure.
Whilst not exhaustive, the following are core ingredients of financial and corporate success:
Clear purpose and direction
Guiding set of values and behaviours
Engaged team with each member knowing their specific role
People who will pay for and value the services / products and skills that you provide
Strong understanding of and a positive cashflow position
A strong balance sheet with some buffers for the unexpected
A disciplined approach to managing borrowings
The ability to balance short / medium / long term priorities
A disciplined approach to risk management
Ability to balance the needs of various stakeholders
The quality of our execution will determine the outcomes we get. Poor execution equals poor results. Average execution equals average results. Above average execution, you get the point…
It all sounds like common sense in that we know what we need to do as a business and we execute and get the results that we deserve.
As leaders or employers, we have a responsibility to bring in assistance where we don’t have the capability and, in most cases, we are accountable to a higher authority. If we don’t perform then our employment is not sustainable and the many who depend on our leadership will feel the consequences.
So, it should come at no surprise that these success ingredients can be directly related to what is required for an individual or family household to ensure financial wellness and success. Whilst, in many cases there is awareness of what is required, the behaviours quite often don’t align and the discipline is often not there to ensure that we execute well.
Two core differences in this personal or household finance equation is; the impact that emotions and behavioural biases have on our actions and the lack of accountability to a higher authority for the outcomes. The presence of a coach or third party can assist in identifying and dealing with blind spots, and restricting or slowing down some of the behavioural biases that slide into our course.
Research continues to support across the globe that many workers are financially stressed. This is having a significant impact on their mental and physical health, relationships, productivity and concentration levels at work.
The cost and lost productivity for businesses can be significant. There is increasing community and employee expectations for an employer to be proactive and provide tangible support. Progressive organisations are taking steps now and know that COVID 19 has escalated the importance of putting in place tangible and practical support in this area. An employee wellness program without a financial wellness binding pillar will be less effective and undermine the anticipated return on investment.
Wellness in the workplace: It’s time to walk the walk
Wellness in the workplace has been a topic increasingly recognised by businesses in recent times. Particularly, the positive return on employees productivity and performance this brings to a business. Most leaders are beginning to recognise they must act, support and empower their employees to get their personal financial wellness and direction in order. COVID 19 has shone the spotlight on the fragility of most household budgets and the dependence on the next pay packet to live. Most employers know they have an underlying problem within their workforce to address, but now it’s time to walk the walk.
Developing a deliberate and ongoing support program with the assistance of trained professionals can take the heavy lifting and pressure off managers who don’t have the skills or time to fill the void. Core to the support approach required is enabling an expansion of the conversations around finances and providing practical tools that can be actioned. It is much more than just providing a shelf of resources and leaving it to the employee.
A ‘should’ do something in this area is no longer good enough. For employers who want to do the right thing and have a defendable position, the time to demonstrate leadership and create the space to deliver these programs is now. It will be one of the best wellness investments you can make.
As individuals and households there is a need to take personal responsibility for the way we engage with our money and the role model we are setting for the next generation. We need to invest the time and effort. We need to appreciate that executing poorly and leaving things to chance puts so many other parts of our broader wellness at risk. Technology continues to develop and is making the process of getting on top of your money much more achievable. It does not come without its own risks and problems as we evolve to a tap mentality and cashless society.
So as households we need to engage around our finances. We need to increase our focus on what is important to us and what we can control. This will drive our behaviours and ongoing commitment to our financial progress. We need to be aware of our money mindset and values and where appropriate put in self-protection measures. Sometimes these can be as simple as putting things out of reach for a period. Understanding and owning our spending is so critical, it empowers us to make informed choices by lifting awareness as to where the money is going.
COVID 19 has certainly reminded us of the dependency on a regular employment income and having emergency funds to support us through unexpected events. Continually refreshing our own understanding of what is most important certainly allows us to make those important priority decisions with less stress.
Never has it been more important for individuals and employers to engage responsibly and build solid foundations of financial wellness for more sustainable holistic wellbeing.
The team at Financial Advice Matters are working with and supporting organisations that are at varying stages of maturity in their financial wellness journey. Our objective is to lift awareness and inspire action.