Are consumers’ finances worse than their health?

by Shelton on July 6th, 2012

filed under Finances

The most recent
Principal Financial Group Financial Well-Being
Index

— a quarterly survey of American workers at small, growing
companies — reveals some interesting links between Americans
financial health and physical health.

Here are five observations about the state of fiscal and
physical health among respondents to this survey:

  1. If you think Americans look out of shape, you should see
    their bank statements.

    In recent years, health agencies, along with public figures such
    as Michelle Obama and Michael Bloomberg, have expressed concern
    over an epidemic of obesity among Americans. The Principal
    Financial survey suggests that there may be an even greater
    epidemic of flabby finances. Survey respondents were even less
    likely to view themselves as financially healthy than physically
    healthy. 53 percent of respondents consider themselves physically
    healthy, while only 31 percent view themselves as financially
    healthy.

  2. Good intentions arent always followed up with
    action.

    For some of the 31 percent of respondents who consider themselves
    financially healthy, this confidence may not be based on any type
    of concrete planning. Only 28 percent of respondents even have a
    household budget, and just 17 percent have created a financial
    plan.

  3. Many people view health as an investment.

    While the evidence suggests that too many people are failing to
    plan financially, they are at least thinking ahead when it comes
    to the relationship between good health and their financial
    future. Seventy-six percent of respondents think that by spending
    time on their health now, theyll reduce medical bills in the
    future. However, given how few have followed through on even
    rudimentary financial planning, there is no guarantee that all 76
    percent of respondents are actually taking regular steps to stay
    physically healthy.

  4. People may be carrying faith in good health too
    far.

    Even good health cant make you immortal, but the survey
    indicates that most people fail to acknowledge their mortality by
    creating a will. 54 percent of those surveyed do not have a will
    in place. Some expressed the notion that they do not have enough
    money to worry about a will, but there are issues besides money
    — most notably, provisions for the care of any children — that
    should be addressed by a will.

  5. Emergency funds are recovering.

    Savings rates in the US

    were chronically low even before the Great Recession, and
    household finances have taken a beating ever since. Still, if
    that recession taught Americans one thing, it was to prepare for
    setbacks, and the survey suggests that people are at least trying
    to
    beef up their emergency funds

    . Over the past two-and-a-half years, the percentage of survey
    respondents who have an emergency fund has risen to 66 percent,
    up from 61 percent. At a time when bank rates offer little
    immediate incentive to save, the growth of emergency funds is a
    sign that more people are starting to think ahead
    financially.

It makes sense that people view staying physically healthy as an
investment that can save them medical expenses in the future. They
might also want to recognize that this linkage works the other way
as well and that following a sound financial plan can reduce stress
and thus help people stay healthier. In any case, when it comes to
both fiscal and physical health, consistent effort is the best path
towards success.

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