Empowering Financial Health: Education, Solvability, Liquidity & Resilience

A lot has been written about financial wellbeing. On the one hand, we have financial coaches and influencers who share practical tips on how to improve it. On the other, banks and Fintechs are positioning themselves as partners in boosting financial wellbeing, offering savings tools and educational programs. Increasingly, Fintechs are also targeting employers, arguing that financially stressed employees are more likely to be absent, less engaged, and less motivated. As a result, solutions like salary advance platforms (e.g. Scudi) and HR-focused financial wellbeing platforms (e.g. Warren) are gaining traction.

Yet, the impact of financial stress and lack of education is substantial. Even in a well-developed country like Belgium, the numbers are staggering:

• In 2025, only 46% of Belgian households are considered financially healthy or resilient. That means 54% are still vulnerable or unhealthy.
• Just 32% of Belgians have sufficient financial literacy.
• Over 60% of Belgian families struggle to pay all their bills.
• 34% of Belgians spend most of their income immediately after receiving it.
• 43% of Belgians say they can not always cover their monthly expenses.

Clearly, financial wellbeing remains a real concern. And it is a complex issue. It is not just about wealth, it is about covering your expenses, having an emergency buffer, planning ahead, managing debt, and making informed financial decisions with confidence.

We could define four key pillars of financial wellbeing:

1. Financial Education

Financial education is the foundation of financial wellbeing. It involves understanding how money works, how to budget, how to choose the right financial products, and how to plan ahead.

Key elements include:

• Understanding money and inflation: Learn the value of money over time. Understand how inflation erodes purchasing power and why money sitting in a savings account may actually lose value when interest rates are lower than inflation.
• Comprehending costs and fees: Grasp the true cost of credit, including interest and fees. Be aware of commissions, hidden costs, and the fine print in financial products.
• Mastering the basics of investing with key principles like:
  • Start early—time in the market beats timing the market.
  • Apply the Rule of 72: divide 72 by the expected annual return (%) to estimate how many years it takes to double your money. E.g. at 6% return, your investment doubles in 12 years.
  • Use low-cost, diversified instruments like index funds or ETFs.
  • Invest consistently using a fixed recurring amount (DCA = dollar-cost averaging).
  • Stick to a long-term, buy-and-hold strategy, avoiding emotional reactions to market fluctuations.
• Learning to budget and plan:
  • Track expenses for 1–2 months to identify spending patterns or "leaks".
  • Use a zero-based budget, i.e. allocate every euro to a specific category (e.g. savings, fixed costs, discretionary spending).
  • Apply budgeting frameworks like the 50/30/20 rule: 50% for needs, 30% for wants, 20% for savings or debt repayment.
• Fraud awareness:
  • Learn to identify scams and phishing attempts.
  • Be cautious of promises of high returns: if it sounds too good to be true, it usually is.
  • Always use trusted, regulated platforms.
  • Understand the best practices for protecting personal financial information from hacks and other forms of financial crime.

Banks and Fintechs can play a crucial role by offering educational content and digital tools that support financial literacy and better financial decisions, such as:

• Financial planning tools, as covered in my blog "PFM, BFM, Financial Butler, Financial Cockpit, Account Aggregator…​ - Will the cumbersome administrative tasks on your financials finally be taken over by your financial institution?" (https://bankloch.blogspot.com/2020/02/pfm-bfm-financial-butler-financial.html)
• Real-time financial reporting tools, such as those explored in blog "Your Personal Balance Sheet - Should everybody have one?" - https://bankloch.blogspot.com/2020/05/your-personal-balance-sheet-should.html).
• Debt management education tools, as described in "Problematic debt - A big taboo in search for a Fintech solution" (https://bankloch.blogspot.com/2023/05/problematic-debt-big-taboo-in-search.html)
• Fraud detection and prevention tools, as discussed in my blogs:
  • "Payment Fraud Exposed: Top Techniques and How Financial Institutions Respond" (https://bankloch.blogspot.com/2025/01/payment-fraud-exposed-top-techniques.html)
  • "The Missing Link in Fraud Prevention: Real-Time Customer Dialogue" (https://bankloch.blogspot.com/2025/06/the-missing-link-in-fraud-prevention.html)
  • "The First Line of Defense: Tackling Scams Before Transactions" (https://bankloch.blogspot.com/2025/09/the-first-line-of-defense-tackling.html)
• Smart product matching tools, like Capilever’s:
  • FINE and CompaRate for choosing the right financial products.
  • RSTT (Retail Securities Trading Tool) for supporting sound investment decisions.

2. Solvability

Solvability refers to your ability to cover expenses with your income.

This can be improved in two primary ways:

Increasing income

There are several ways to increase income:

• By boosting your current income source: This could involve negotiating a salary raise, optimizing your benefits package (e.g. more tax-efficient perks like a company car), or preventing missed income such as using alerts for unpaid invoices or forgotten reimbursements.
• By adapting or complementing your income: Consider seeking higher-paying opportunities, launching side gigs, improving investment returns, or claiming applicable subsidies.

Reducing recurring and daily expenses

Reducing expenses is equally important and can be approached in multiple ways:

• Recurring expenses: Review and optimize subscriptions, renegotiate loan or credit terms, reassess insurance contracts, avoid unnecessary credit, and switch to more cost-effective providers (e.g. banks, telecom, utilities). Also eliminate "small leaks" like unused subscriptions and prioritize paying off high-interest debts (e.g. credit cards).
• Daily expenses: Set clear spending priorities, use discounts and gift cards, track promotions, and avoid impulse buys.
• Optimizing taxes: Taxes can be optimized by ensuring all deductible items are claimed, exploring ways to optimize inheritance taxes, and selecting financial products with favorable tax treatment (e.g. EU passport-compliant funds).

Banks can play an important role in supporting solvability through tools like deal platforms, spend-tracking solutions, AI-based advisors and integrated expense management features, e.g.

• Deals: Platforms like Swave, Cake, FamilyCard, Trooper, and Acorns (Found Money feature) exist as standalone or white-labeled solutions integrated into banking apps. Both KBC and ING in Belgium, for example, provide such deal features. See my blog: "Deals as a competitive differentiator in the financial sector" (https://bankloch.blogspot.com/2020/11/deals-as-competitive-differentiator-in.html).
• Expense optimization: Standalone tools like LookAfterMyBills or Cushion.ai help identify savings opportunities. Others, such as Minna Technologies, are embedded directly within banking apps (e.g. Swedbank, Danske, ING).
• Personal Finance Management (PFM) tools: These help users spot excessive or obsolete spending. At KBC, for instance, the AI assistant Kate regularly alerts users when spending spikes in certain categories or when savings opportunities arise.

3. Liquidity

Liquidity is about having enough cash on hand when needed, both for expected and unexpected expenses. Managing liquidity means striking a balance: having too much cash means missing out on investment returns (opportunity cost), while too little can lead to late payment fees, interest charges, or administrative burdens.

Even financially solvent individuals can face liquidity issues, often due to timing mismatches between income and expenses. For example, salaried employees may receive income at the end of the month, while bills start piling up earlier. Freelancers and business owners often face long delays in invoice payments, making cash flow management even more complex.

These timing gaps can occur in the short term (e.g. during a single month) or long term, such as during particularly expensive months (e.g. back-to-school season in September) or high-spending years (e.g. home renovations).

Managing these imbalances typically involves:

• Maintaining a savings buffer of 3–6 months of expenses to cover shortfalls.
• Using traditional credit products, such as overdrafts, consumer loans, or bridge loans.

However, these solutions can carry significant costs. That is why alternative tools are emerging, often supported by banks or Fintechs:

• Salary advances: These can offer quick liquidity, often subsidized by employers. However, they can become a slippery slope if used too frequently.
• Capilever’s Lombard² product: A credit line secured against assets (typically a securities portfolio), allowing users to invest their excess funds while retaining access to liquidity at a lower cost when needed.
• Capilever’s FLEX product: Designed to bridge medium- to long-term liquidity gaps.
• Bullet loans: Offered against pension savings or reserves held in a management company, enabling upfront investments with repayment deferred until future income materializes.

Ultimately, liquidity is not just about access to cash, it is about managing timing, tools, and trade-offs effectively.

4. Robustness

Robustness is about financial resilience in the face of life’s disruptions such as job loss, divorce, illness, or unexpected accidents. While it overlaps with the concept of liquidity (especially emergency savings), robustness goes one step further: it evaluates how well your financial situation can absorb serious shocks.

Planning for these scenarios involves:

• Maintaining sufficient emergency buffers to cover unforeseen costs.
• Using financial planning tools, such as Monte Carlo simulations, to test your financial resilience under different negative scenarios.
• Regularly reviewing and updating your insurance portfolio, ensuring coverage is adequate for life, health, income protection, and property risks.

The goal is to anticipate the unexpected and assess how prepared you are. Can your finances withstand a prolonged income interruption? Would your household cope financially with the loss of a partner or a major medical event?

Banks and financial institutions can support this through advanced planning tools, while a well-structured insurance portfolio remains a crucial line of defense.

As this overview shows, financial wellbeing is multifaceted. Banks and Fintechs can play a valuable role across all four pillars. But providing a holistic, personalized, and cost-effective approach remains challenging. AI assistants are starting to fill that gap—offering daily support and financial guidance. But how much control are we truly willing to give them? And is today’s AI reliable enough for such a critical role?

Perhaps, for now, we are best served with AI that suggests, while ensuring people are still educated and empowered to decide.

For more insights, visit my blog at https://bankloch.blogspot.com