What Is Employee Financial Wellness? A Guide To Supporting Your Team
With the cost of consumer goods at the highest point in four decades, 91% of employees report facing personal financial issues, including household budgeting, debt reduction, and emergency and short-term savings. As more workers worry about making ends meet, they’re looking to employers for help. If you’re not offering tools to boost employee financial wellness, it may be time to start.
In this article, we’ll explain what financial wellness is, the benefits of a program to you and your employees, and the steps to take to implement this type of support in your company. After reading this, you’ll understand how to launch a financial wellness program alongside your traditional benefit offerings.
What is financial wellness?
While there is no single definition for an employee financial wellness program, they are generally designed to assess an employee’s complete financial picture or overall financial health, then support their ability to manage short- and long-term needs and, ultimately, improve their overall financial well-being.
It’s important to note that financial wellness isn’t just about creating a plan for employees but also enabling them to make decisions to manage that plan over time. The end goal is really a shift in behavior – and one that’s sustainable.
What are the components of an employee financial wellness program?
Financial wellness programs offer a variety of resources, training, and support to help address employees’ personal financial concerns. Depending on how you design your program, you may include offerings to address some or all of the following:
- Spending behaviors
- Debt reduction
- Credit building
- Student loan repayment
- Emergency and short-term savings
- Financial goal setting
- Financial crisis management
Generally speaking, these programs are separate from retirement planning services that you may offer as part of your 401(k) benefit.
To best educate employees on these topics, it’s a good idea to employ a variety of different methods. For instance, you may choose to hold workshops or lunch and learns, provide financial education materials like checklists and calculators, or offer free or subsidized sessions with an advisor. If you don’t have the time or expertise in house, you can find tools and services from low- or no-cost sources like nonprofits and government agencies, or partner with a third-party vendor to lead your educational offerings.
What are the benefits of offering financial wellness?
An employee financial wellness program can help reduce employee stress and anxiety over their finances. In turn, this can improve their mental and even physical health. But you’ll also realize advantages as an employer. By addressing employees’ financial health, you may see several important improvements in the workplace such as:
- Improved productivity: 55% of stressed employees who are distracted by their finances at work spend 3 or more hours each week at work dealing with their finances. By relieving some of their stress through a program, you may maximize their productivity.
- Enhanced engagement: Employees who worry about their financial well-being may have a hard time focusing on their job tasks. Easing their concerns with financial wellness that helps them feel more in control can increase their attention on their role at work.
- Greater retention: Employees who are struggling with their finances may look for another job with more pay. By offering financial support that helps them save more, employees may be less likely to look for another job. In fact, 56% of employees who engage with their financial wellness program are more likely to stay with their company.
How do we measure the success of a program?
When you launch a program to help boost financial wellness for employees at your company, you’ll want to set goals at the outset so you can understand your ROI. There are both quantitative and qualitative measures you can use to gauge whether your program is effective. Some options to measure your impact include:
- Program participation like attendance at events
- Employee surveys to understand how employees feel about their financial health as well as satisfaction with the program. You can also ask about behavior changes such as whether they have a budget, pay their bills on time, have an emergency savings account, decreased their average credit card balance, and more.
- Utilization of health benefits for stress-related illnesses
- Number of sick days taken per year
- Number of 401(k) loans or hardship withdrawals
- Employee turnover
By assessing factors like these, you’ll be able to see where improvements need to be made to boost engagement and outcomes.
What are the steps to get started with financial wellness for employees?
For a successful program, there are several considerations you’ll want to take into account:
- Employee needs: Before you launch a workplace financial wellness program, it’s important to assess your workforce needs. A simple way to do this is a survey to understand the challenges they’re facing in reaching their financial goals so you can decide which topics to highlight. Just be sure employees know their responses will be kept confidential.
- Program scope: As we discussed earlier, you’ll want to decide on what offerings you want to provide to give employees the knowledge, skills, and resources they need to help them with their financial decisions. Keep in mind that the more individualized your program is, the more effective it will likely be. So, for example, one-on-one advice may drive more engagement than a group class.
- Communication: While the benefits of a financial wellness program may seem obvious, it’s important to share with employees why it’s important. Communicate about the program in onboarding, internal newsletters, staff meetings, and other existing channels to build awareness. And spell out exactly what’s in it for employees.
- Monitoring: Based on the metrics you decide to measure to evaluate the program, conduct analysis to determine how to best adjust the program. Remember, a successful program will change attitudes and behaviors for lasting results.
How to Best Start Offering Financial Wellness to Employees
A meaningful employee financial wellness program can benefit both you and your team and be a valuable tool in today’s battle for talent. In fact, financial wellness is a key way you can differentiate yourself since 77% of employees said they’d be more likely to accept a job if they had access to financial benefits. To learn more about voluntary benefits and how they may help you get an edge with current and prospective employees, read our guide on these tools for attracting and retaining talent.