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How Financial Literacy Can Improve Your Attitude Towards Money

What is Financial Literacy?


Financial literacy is a person’s ability to understand and make informed decisions about money and finances. It’s important to have good financial literacy because it affects our everyday lives and overall financial wellbeing. Unfortunately, there are a number of barriers that prevent people from being financially literate (i.e. scary topic, afraid to make the wrong choice, difficult to interpret, etc.). To better understand this issue, we developed the Financial Fitness Score.


The Financial Fitness Score is a simple way for individuals to measure their financial wellness based on their responses to ten questions. They are then assigned a number that correlates to where they fall on the financial fitness spectrum. An individual’s Financial Fitness Score can range from 1 (“struggling”) to 5 (“prospering”). We found that financial literacy is a key determinant of an individual’s fitness score; the greater the level of financial literacy, the higher the score. Those with higher fitness scores are more likely to go to banks and financial advisors when they need help with their finances. This is likely related to their degree of financial literacy, the amount of money they have available to invest, and their level of comfort with finances. Conversely, those with lower fitness scores have limited options because of their risk profile (i.e. payday loans, high-interest credit cards, loan sharks, etc.).


How Financial Literacy Can Improve Your Attitude Towards Money


There doesn’t appear to be a clear link between income levels and attitudes towards saving. However, when we examine attitudes and financial fitness scores, a pattern emerges: those that are struggling and coping have a strong preference to spend. The opposite can be said for those that are prospering. 



What does this mean? A lack of financial literacy and a lower financial fitness score can hold people back from making smart money moves. Luckily, financial wellness programs can help bridge the gap by allowing people with lower financial fitness scores to develop the skills of 4s and 5s. For example, salary-linked solutions can make 2s look and behave like 4s because they are ‘forced’ to save first and spend what’s left over. A proper financial wellness program will help build a regular savings habit and increase financial resilience.


Additional positive effects that developing strong financial literacy can have on your life and, ultimately, your attitude towards money, include…


  • Less stress, since research shows 48% of employees are financially stressed. Once your financial literacy has improved, you will feel less stressed when it comes to money.
  • Better sleep, since employees with money worries are 8.1 times more likely to have sleepless nights.
  • More productive at and better quality of work, since employees with money worries are 5.8 times more likely not to finish daily tasks and 4.9 times more likely to experience diminished work quality.
  • Improved relationships with colleagues,  since employees with money worries are 4.3 times more likely to have troubled relationships with colleagues.
  • Better spending, borrowing, and savings habits. Research shows 34% of employees regularly run out of money before payday. Better money management will decrease and/or eliminate the likelihood of this happening.
  • Better positioned to succeed in tomorrow’s economy because the lower the fitness score, the more a person borrows on short-term credit which ultimately hurts their credit score.
  • More access to other lines of credit. 70% of those with a fitness score of 1 have been refused a loan.
  • Regain control of your finances and increase your credit score. 58% of those with a fitness score of 1 have missed a payment.


Interested in learning more about  financial literacy? Check out our Financial Literacy Month blog post. Ready to take action? Ask your employer what they’re doing to combat financial stress in the workplace or tell them to download a copy of the Employer’s Guide to Financial Wellness.


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