Employee Financial Wellness
What is Financial Wellness?
We define Financial Wellness as “effectively managing your economic life.” This concept encompasses many factors, including:
- Managing personal spending
- Being prepared for financial emergencies
- Having access to tools and information to make good financial decisions
- Having a plan for the future
The goal of financial wellness is financial security, which is one of the most common goals reported by employees across all segments. However, many employees report that they don’t feel that they have access to the kinds of financial services and benefits that would be the most helpful to them.
Typically, employer financial health offerings consist of limited employee assistance programs (EAPs) that are identified for crises and are only a small part of the employee’s total health benefits package. Even worse, these programs are often not included in the benefits package at all.
What many employers are missing is a comprehensive approach to financial well-being, one that helps employees build lasting financial strength and stability.
A Holistic Approach to Financial Wellness
Health and wellness programs typically don’t just take care of employees when they are sick; they also work to prevent sickness in the first place through diet, lifestyle, anti-smoking and fitness programs.
Financial wellness programs are no different. They should offer holistic support and advice to employees so that they can meet both short-term and long-term financial goals. Every employee has different priorities and obligations, so a successful program should be flexible enough to work with their unique circumstances.
An important part of a holistic approach to financial wellness is teaching the concepts of good financial health and providing tools to act on that knowledge. This means that employees need not only an education, but the tools to put the information into action.
Benefits of Employer-Based Financial Wellness
Employers feel the effects of their staff’s financial health, too. Financially stressed employees are less productive and are less likely to stay with their employer. Pat Milligan, a Senior Partner at Mercer, found that 22 percent of employees reported missing at least one day of work to handle financial issues; 15 percent spent at least 20 work hours on personal financial tasks, and a full 20 percent had to resign due to financial stressors.
A high level of financial wellness gives employees the ability to make informed decisions and manage long-term financial strategies. When employees have a comprehensive understanding of their finances, they are more effective with dividing their paychecks for bills, savings, investments and other financial obligations.
Maximizing Retirement Success Through Education and Communication
Education remains the key to successful behavior change and greater financial wellness. Employees with a better education towards their retirement options are far more likely to take advantage of a company match to achieve a healthy retirement savings rate of 15% invested for their future.
The National Business Group on Health (NBGH) partnered with Fidelity Investments for their eighth annual survey on Health and Well-being and discovered the share of companies offering some form of financial security program to educate workers about debt has risen from 76% in 2016 to 84% today. And nearly three-quarters of those surveyed said they’re using employee incentives to drive engagement with wellness programs.
Certain programs continue to have longstanding popularity, but there are also some new and rising approaches to financial wellness.
Here are some of the benefits companies expect to offer in the near future:
- Lunch and Learn seminars: 82%
- Tools for learning about mortgages, wills and income protection: 74%
- Training around saving for emergencies, debt management and budgeting: 71%
- Student loan counseling or repayment assistance: 25%
Jennifer Robison, The Business Case for Wellbeing, Gallup Business Journal https://businessjournal.gallup.com/content/139373/Business-Case-Wellbeing.aspx
The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers https://www.ssc.wisc.edu/~scholz/Research/Financial_Education.pdf
Financial Wellness at Work, Consumer Financial Protection Bureau https://files.consumerfinance.gov/f/201408_cfpb_report_financial-wellness-at-work.pdf
Pat Milligan, Driving Financial Well-being: A New Multidimensional Approach for Organizations, Mercer Aliza Gutman, Understanding and Improving Consumer Financial Health in America, Center for Financial Services Innovation
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