What is financial security, and when are you financially healthy?

Financial insecurity, financial worries, financial concerns, there is no day without the troubles surrounding finances highlighted in the news. Several researches suggest that younger generations experience stress due to finances, or feel insecure about their finances in general. At Equip, we aim to provide financial peace-of-mind for all employees. But before we get into that, let’s first take a look at what precisely is financial security - and what is the difference with financial health and financial well-being.

Financial health, financial security and financial well-being

There are many terms relating to financial well-being, but let’s start with what it means to be financially healthy. Financial healthy means being able to cover your living expenses comfortably, which can greatly contribute to overall happiness. It includes the ability to pay for necessary medications, stay debt-free by paying your rent or loans, and participate in social events without worry. Financial security takes this a step further, ensuring that you can handle emergencies and plan for the future. This might involve paying off student loans fully, having a robust pension, or maintaining emergency savings for unforeseen expenses. Combining these elements, financial well-being encompasses not only financial health and security but also the knowledge and education to manage your finances effectively. It doesn't mean having everything perfectly in place, but rather having a solid plan and the skills to achieve financial stability.

Understanding the need for financial security

So now that we have established the differences, why does the topic keep coming up?

Prices in 2023 were 20% higher than in 2018 due to inflation, while wages have not increased as much. In addition, the tight and expensive housing market is making home ownership increasingly a nightmare for the younger generations. Moreover, higher interest rates are saddling people with higher interest payments, including student debt. Lastly, the new flexibility to pensions is complicating retirement decisions. All the more reason to understand that all employees are struggling with financial insecurity. For most employees, employers are the primary source of financial security. This encompasses not only salary but also bonuses, pensions, and career development opportunities. However, a significant number of people are concerned about their financial future. Our recent research showed that 45% of people feel insecure about their financial future. Thus, it is not weird at all to point out you have difficulty with understanding your finances- either with your current status or the future.

Achieving financial security

It is clear that there are a great range of topics on which employees can feel financially insecure. This also means that ‘feeling financially secure’ is unique and personal for everybody. At Equip, we define financial security as: “Feeling confident you can achieve your life goals financially; like buying a house, having a good standard of living, raising your children and retiring comfortably”. We help employers enhance their position in being the primary source of financial security for their employees. We think that as an employee, you should be supported by your employer not only in terms of money, but with a holistic financial plan for now and the future. Let’s make sure you and your colleagues achieve financial-peace-of-mind and contact us for more information.