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What is financial fitness and why measure it?

Measuring financial fitness helps improve financial wellbeing by showing key areas to focus on.

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Financial fitness, or wellbeing, is about having the financial freedom to do what lets you enjoy life. 

It’s about being and feeling in control of your money and feeling financially secure as you manage your day-to-day costs and look towards the future. An important aspect of financial fitness is being prepared for the unexpected, so you’re able to recover when a setback takes place.

Measuring financial fitness in Australia

In 2019, Melbourne University and the Commonwealth Bank of Australia published the first Australian measurement tool for financial wellbeing, the CBA-MI Scales. The tool comprised two measures, one that used banking data to measure observed financial wellbeing and one that used survey data from people’s own experience of their financial fitness to measure perceived financial wellbeing. 

The research found that of all the different factors that influence financial wellbeing, or financial fitness, financial behaviours had the strongest correlation. The behaviours that mattered were simple everyday money habits that can be built over time, including disciplined spending and saving, planning and reviewing finances and being willing to sacrifice spending today to save for tomorrow. 

Money habits are key to financial fitness

This is why the team at Earnd are so passionate about helping employees build financial fitness by focusing on the everyday money habits that matter. Our products and services have been and continue to be designed around what we’ve found to be the five key behaviours for financial fitness

These are:

  • Engaging with your money
  • Spending less than you earn
  • Managing debt responsibly
  • Being prepared for a rainy day
  • Saving money for the future

But while it’s all well and good to design products and services to support financial wellbeing, it’s no good if you don’t measure your success and change what’s not working - a famous behavioural scientist once said, ‘You are what you measure’. This is why we introduced a Financial fitness plan.


Our financial fitness plan helps us measure success

The financial fitness plan is an interactive quiz that uses the 5-question CBA-MI reported scales to provide employees on our app with personalised financial guidance. This means we’re able to measure employee financial wellbeing, use aggregated data to better understand which areas employees on our app need the most help and measure the improvements we make to financial wellbeing over time. 

It also means employees who use the Earnd app can understand their financial fitness and get a personalised plan with actions and steps that can help them take their finances to the next level. Their insights are prioritised for them, according to their answers and helps them focus on key money habits. 

Overcoming behavioural barriers to financial fitness

While we know that financial behaviour has the greatest impact on financial fitness, we also know there are common barriers to securing holistic financial wellbeing. One behavioural barrier to saving for the future, for example, is present bias, which means we tend to focus our concerns on today, not tomorrow.

Understanding there are common hurdles to securing financial wellbeing has led us to include insights from behavioural science in the financial guidance we provide through the financial fitness plan. 

Our financial guidance follows recommendations from the OECD, in that it is short and appropriate, it follows easy to remember rules, it’s relevant and it helps raise awareness of personal biases. 

Our Financial fitness plan is just one step to creating an app that puts employee financial wellbeing at the centre of everything, so we can measure our efforts and truly make money simple, not stressful.

See our Building financial fitness handbook.

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