Looking for a conversation starter with your clients? Happy National Financial Awareness Day!

Financial Awareness Day

National Financial Awareness Day is a great time for clients to reflect on their financial practices and plan for a more secure future. Financial literacy can seem overwhelming or out of reach—but it doesn’t have to be that way. Although the origin of the holiday is unknown, its purpose is to promote good financial practices.

National Financial Awareness Day can be a great time to check in with your clients and discuss credit card debt, check their credit score to make sure they’re where they want to be, help ensure they’re on track for retirement, and so much more. Setting goals, making small changes, and talking to you, their trusted advisor, can help clients build confidence in their own financial literacy.

Why Financial Literacy Matters

Americans with higher financial literacy are more likely to make ends meet than those with lower financial literacy, spending less than their income and setting aside emergency funds at higher levels.¹ As financial professionals, it’s part of our job to encourage financial literacy and build relationships with clients that foster trust. Empowering clients to make informed financial decisions increases confidence in their own abilities.

It is also important to note that a demographic and socioeconomic divide continues to exist. For example, African American adults are more than twice as likely to be unbanked, compared to white counterparts. Younger adults, those who have a high school degree or less, and those who identify as African American or Hispanic/Latino were most likely to experience income drops in 2021.¹ Remembering that not all clients come from the same background or with the same privileges is helpful when addressing financial goals and concerns.

Savings Goals

Speaking with clients about their savings goals can be a great way to engage them in basic financial planning and help prepare them for unexpected bills. According to a report by FINRA, 53% of survey respondents reported having 3 months of emergency savings in 2021. Although 53% isn’t ideal, this number shows improvement from 35% in 2009.¹ In addition to basic savings accounts for emergency funds, this could also be a good time to also discuss 401(k) investments, HSA accounts, and other long-term investment options.

Our paycheck impact tool can be utilized to help clients calculate how their income could impact their 401(k) and retirement savings plans.

Budgeting

Budgeting is an important step in helping your clients manage their money, helping to ensure they are controlling their debts and have money available to invest. Sticking to a budget can help your clients save a little bit each month and build up their savings. It’s also a good way to visualize how much they are spending each month on expenses such as dining out, entertainment, groceries, and more. By keeping track of these common expenses, they can work to cut back and be more conscious about spending habits.

Retirement Planning

National Financial Awareness Day can also be an opportunity to discuss retirement planning with your clients. For many, having a solid plan is the key to feeling ready for retirement. Sharing these simple tips with your clients, or using them as a guide can help start a meaningful conversation about retirement planning:

1. Know your monthly number—using a spreadsheet to track current spending can help anticipate future spending and costs.
2. Make a plan for social security—Nationwide’s Social Security 360 Analyzer can help to identify optimal filing strategies, generate custom client reports, and evaluate break-even and cash flow analyses.
3. Think about long-term taxes—there are various strategies to address long-term taxes based on your client’s specific goals. Clients should be aware that taxes could increase over time.
4. Add another lifetime income stream—social security is not intended to be your client’s only source of income. You can discuss ways to invest in income benefits that they cannot outlive.
5. If applicable, plan for both spouses—If your client has a spouse to consider, there are ways to make sure they are covered via joint plans or other opt-in benefits if one person significantly outlives the other.

For more information on retirement planning with your client, you can read our blog detailing the 5 Simple Tips for a Retirement Income Plan summarized above.