Pattie-Lovett Reid: The difference between financial literacy and financial wellness
Financial literacy isn’t financial wellness, according to a new survey released by human resources consulting firm Mercer.
The good news is financial literacy levels among Canadians are high, according to the survey, titled Inside Employees’ Minds Financial Wellness. But that’s only half of the equation: This knowledge isn’t translating into action, financial security or wellness.
Financial wellness is about more than just retirement security or financial literacy. To assess your level of both financial knowledge and wellness, examine how you would respond to these four questions from Mercer:
- Do you feel you have control over your day-to-day and month-to-month finances? Do you know what’s coming in and going out, and are you comfortable with it?
- Do you have the ability to absorb a financial shock? If you had to come up with $500 right away, could you do it?
- Are you making real progress in achieving your financial goals? Not just saving for retirement, but meeting more immediate goals such as upgrading a home or saving for a vacation?
- Do you have the financial freedom to make choices that allow you to enjoy life? For example, can you afford to travel? Can you retire when you want?
To be fair, not having all the answers isn’t what is key here. It is asking yourself the right questions and confronting the facts. That’s where financial literacy and knowledge translates into action and financial wellness kicks in.