Financial wellness requires a change of mindset

By Ron Harris

Can financial wellness change the mindset of working-class Americans who are conditioned to live paycheck to paycheck?

Our society and the financial institutions teach us to have a certain way of thinking about our finances, through the pleasure of things that cost money.

How did it get like this? Part of the reason is because we have been trained by our society and financial institutions to think the way they want us to. They hide the chinks in their armor, we don’t see what they don’t want us to see and consumers we don’t ask the important questions.

Most of us don’t:

Question paying a fully amortized mortgage for 30 years.
Have any idea how to cancel interest.
Know how credit card companies change our interest rate.
Have any idea how minimum payments are calculated.
Realize that there are tools that can be used to pay debt.
Comprehend the full benefits of a life Insurance policy.
Understand what it means to be you own bank.
Realize that what the banks do to us, is reciprocal.
Know the difference between recourse or nonrecourse loans.
Read the small print on contracts or financial documents.

If we play the game on the financial institutions’ playing field and by their rules, then we are playing their game. Most of us think these financial institutions are the only game in town; we think settlement, consolidation, modification and refinancing are our only viable alternatives.

A bank would never borrow money under the same terms and conditions as they provide us. So how do they borrow money, undertake financial projects or save money?

As individuals, when we begin to think outside of that box financially, and we find a potential solution, our friends tell us what we’re thinking is not possible. If it is outside the banking realm, then it's probably too good to be true, so we immediately start to doubt the possibility. Then we see a billboard, watch a commercial or our bank sends us a meaningless promotion and we begin to feel safer in their arms again.

Our friends and relatives, in most cases, are not financial professionals. Financial institutions, large corporations, media and the rich influence us into looking in the wrong places for solutions to our problems.

So we live paycheck to paycheck like it is normal. We're in debt and we accept it. We have trouble with credit cards, but we keep buying. We don't know how to manage our finances and we think there is no real way to change our situation except through the bank.

We know that people buy things they don’t need, with money they don’t have, to impress people they don’t know. I am not trying to blame the situation solely on the banks; we all are to blame.

In either case, traditional financial institutions -- even some that provide financial wellness benefits -- are working hard to pull consumers further and further into debt. This adds to a vicious cycle for the economy and for millions of American families. This is an economy built on the snowball effect that credit card interest, student loans and mortgages create. Financial wellness must address personal finance first and then retirement.

The profit in our income goes to the financial institutions as interest, and debt is why we can’t save!

The problems we have with banking, the credit card industry, mortgages and student debt are all because most of us don't know how these mechanisms work. We don’t use all the resources at our disposal. We don’t even understand how we can use financial tools like asset-based life insurance to bank like the banks do, while the people who do so prosper.

We would know if we had been taught in school, taught by the institutions that created these instruments, or by the agents who sell them. Unfortunately, their main purpose is to make money for the financial institutions that created these products.

Free your mind and your cash will follow!

Money is constantly occupying our minds. From policymakers to businesses to the media - there always are forces influencing us. Americans are hurting financially and need to change their mindset to break out of this cycle and take control of their money. This takes more than financial literacy; this is what financial wellness must do.

We live in one of the most advanced societies in the world with all the technological, social and medical advances we have made; yet many people cannot manage their money effectively. Many people have no idea how to make the most of their money. With all the noise out there, we are paralyzed; in fact, we wouldn’t recognize or trust a good financial solution if it fell in our laps.

The banks, advisors, media and the government tell us things like we must have a 401(k) in our retirement plans. But a 401(k) with deferred interest will most likely run out of money earlier than we think.

In Investopedia, November 2021, financial experts discuss the realities of the 401(k): “The cost of living increases constantly. Most of us underestimate the effects of inflation over long periods. Many retirees believe that they have plenty of money for retirement in their 401(k) accounts and that they are financially sound, only to find that they must downgrade their lifestyle and may still struggle financially to make ends meet.”

How many American families are really prepared to spend five years of retirement living on $1,000 per month? Think about it! In the future, do you think interest rates will go down, stay the same or go up? If we can’t take care of our personal finances today, how do we deal with inflation tomorrow?

It's time to find out how we can help employees access all the tools available, and demand our elected officials require financial institutions to explain and teach us what we need to know, not just take our money. We have a right to understand how our finances work.

Don’t hold your breath waiting for that to happen. You know how it goes. An employee's life gets stressful. Bills pile up on the table. They feel like they’re barely making ends meet each month.

But there are real solutions out there. Workers really can get out of debt. Their mortgages can be paid in as little as five years, and they can cancel as much as 70% of their interest. Employers can help them accomplish these goals and can help workers retire with dignity and build generational wealth.

Employers can initiate a real-world financial wellness program and help their employees learn new ways to make their money work for them!

A financial wellness program must fit our current economy and it should integrate financial services with the latest technology. It must bridge the financial knowledge gap, uncover the financial pitfalls and remove the financial obstacles. The solution must be easy to access, personalized, private, digitally interactive and resource rich.

It should guide, reinforce, and have an immediate impact. The program must expose working-class Americans to the proven techniques used for years by the rich, corporations and financial institutions.

If financial wellness programs showed people how to stop using credit cards and how to pay off their mortgages quicker, our economy would ease itself from its slow rot of infinite debt and perpetual economic crisis.

Like the old saying, it takes a village, but in this situation the village is an organization.

Ron Harris, MBA, MBE, is a Certified Financial Educator, author, insurance professional and CEO of Financial Literacy Group. Ron may be contacted at [email protected].