On my blog, I often discuss budgeting, saving and debt elimination. I don’t talk about how to protect you and your family that often, although I’ve written a few posts on life insurance. One popular post aboutlife insurance is my $12,000 money mistake with permanent life insurance. However, I don’t spend much time writing about how to protect your income.

Today, I read an interesting article from Fidelity on a new scoring mechanism they developed to measure your financial health. I’ll summarize the article and chime in on my perspective of a few items discussed in the article.

Fidelity calls its scoring mechanism the Fidelity Financial Wellness Score. The scoring mechanism is an instrument for a person to measure their financial health, identifies areas where they need help with finances, and helps to develop an improvement plan. To measure the score, four domains of Financial Wellness are measured: budget, debt, savings and protection.

This scoring mechanism examines objective and subjective criteria. For example, objective criteria might be how much money does a person save each month. Subjective criteria could be how does a person feel about saving each month. Do they do it happily because they know the freedom it can buy them in the long run? Or, do they save because someone told them to do it and they don’t understand why they should be saving?

Fidelity’s Survey Results

Fidelity surveyed 6,000 people to measure their financial wellness score. The results are displayed below.




I was happily surprised that over 50% of the people they surveyed had a financial wellness score of good or excellent. Nice job, folks!

My take, which is really stating the obvious, is that it all starts with your expenses. If you barely cover your expenses with what you make each month – i.e. living paycheck to paycheck – you cannot work on paying down debt or saving for retirement.

I am curious where the additional money goes for the folks in the excellent category. An 18% savings rate is nothing to squawk at. But with what appears to be so much extra money left over after essential expenses and debt, you’d think more money would be going toward retirement?

Other Key Takeaways

Citing a part of the article from Fidelity, “The survey also reveals:

  • Generation X is the most financially stressed: More than half of GenXers5 (52 percent) feel neutral or negative about their debt situation. By comparison, nearly two-thirds of Boomers6 (65 percent) feel like their debt is manageable.
  • For many, money brings happiness: 57 percent of those surveyed said they could not be happy unless they are financially secure. Surprisingly, Millennials7 are more likely to feel this way than other generations with 66 percent agreeing with the statement.
  • People are most concerned about debt: 30 percent agree strongly that their household has too much debt and 11 percent say they think about debt “all the time.”
  • Financial stress hits home for women: Women are twice as likely to report feeling worried or sick about their financial situation as men. “

On point one, I think the main reason GenXer’s are stressed financially is due to the two financial crises they’ve endured. Now, Boomer’s also experienced the same two crises, but they had their money in the market longer. Additionally, during the 2009 crash, they hopefully had more of their portfolio in bonds rather than stocks. GenXer’s likely did NOT have much of their portfolio in bonds during the dot-com bust and the financial crisis of 2009.

Point two is misleading. Money bringing happiness versus being financially secure are two different things. There are many people that make significant incomes and spend like crazy on things that make them “happy”, but they are likely not financially secure. Being financially secure doesn’t mean you need to make a great deal of money. Mr. Money Mustasche lives of off $25k-$27k per year.

Point three. Debt is scary. Develop a plan to get your finances under control so you can start your journey toward debt freedom. Need some inspiration?

Here are some cool stories:

Julie, at Millennial Boss paid off $90k in a couple years.

Millennial Money Man paid off $40k in less than two years on a teacher’s salary.

Follow Matt’s journey of paying off debt and investing at the same time.

Point four I can’t necessarily relate to as a man. But I can proudly say my wife helped us hone in on financial security even before we got married. She was adamant about starting an emergency fund early on. Now, we are in a good spot with a sizeable emergency fund to weather any rainy days.

Where do you think your financial wellness score would rank?