Why Employee Financial Wellness Is the Next Big Trend
How many times over the past couple of years have you heard someone mention struggling with money-related stress?
My guess is, probably too many times to count. And for every person who did mention it, there are probably several others who were too embarrassed to bring it up.
As a business owner, maybe you’ve struggled with finances over the past couple of years. The global pandemic wreaked havoc on all kinds of businesses, big and small.
Maybe it was your family and friends who struggled. Lots of people lost jobs, some even lost loved ones, and everyone lost a sense of certainty.
Or maybe it was your employees — whether you realized it or not. As wonderfully as you treat them, it’s tough to know what’s really going on in their financial lives. After all, the average employee spends 13 hours worrying about finances while at work — each month. As much as we want to, we don’t leave our financial stress at home when we go to work (or log in to Zoom).
Financial stress is on the rise for employees everywhere, and as a result, so are employee financial wellness programs. Read on to learn about employee financial wellness, why it’s so important for you and your employees, and why it’s here to stay.
What Is Employee Financial Wellness?
Employee financial wellness refers to programs that help employees reach their financial goals, plan for the future, and address their financial stress.
Think of employee financial wellness like you would other employee wellness programs. Employee wellness programs help employees improve and maintain their health — which in turn makes them happier, healthier, and more productive employees.
Employee financial wellness programs are similar — but as the name suggests, they address financial wellness. Financial wellness includes four key elements:
Having control over day-to-day finances
The ability to weather a financial emergency
Getting and staying on track to reach financial goals
Having the security and freedom to live the life you want
Like other wellness programs, financial wellness has positive effects on individual employees and the business as a whole.
Examples of Employee Financial Wellness
Now that you’re familiar with what employee financial wellness is, let’s dig into some specific examples of what it could look like in a workplace.
Retirement savings plan: 52% of Americans feel that they’re behind when it comes to retirement savings. Retirement savings plans — especially those with matching dollars — can help employees prioritize this critical goal. Plus, a recent study found that retirement savings plans are the most important financial wellness benefit to employees.
Safety net insurance: Safety net insurance includes life and disability insurance, among other things. As unlikely as it seems, one in four twenty-year-olds will become disabled before retirement age. If it weren’t already important enough, the need for such insurance became even more evident during the global pandemic.
Emergency savings funds: 56% of Americans can’t cover a $1,000 emergency. The stress caused by such an emergency can be crippling — and on the flip side, being able to cover such an expense can bring immense peace of mind. Employers can help employees save for such emergencies by funding this type of account through payroll deductions — much like a retirement savings account.
Reimbursement: In a time when so many jobs are remote, commuting, for instance, is much less attractive. Offering reimbursements for things like gas, student loans, and childcare — things many Americans are struggling to pay for — can help ease these common financial burdens.
Financial planning or coaching: In order for employees to make the most of all these benefits, it’s crucial they have the financial guidance to do so. A financial coach, and in some cases a financial planner, can help your employees take full advantage of these benefits and get on track to reaching their financial goals.
Why Is Employee Financial Wellness Important?
As a financial coach, I know financial wellness is inherently important — for everyone. But in the context of your business, there are clear and drastic benefits to both employees and employers. Here are just a few:
Benefits to employees
Employees who feel like their employer doesn’t care about their financial wellbeing are less engaged at work — especially those who are struggling with financial insecurity. For this reason, they’re less likely to keep their jobs long-term.
A focus on financial wellness can help employees break the cycle of living paycheck to paycheck. And if you don’t think any of your employees struggle with this situation, chances are, some do. In fact, about 64% of Americans live paycheck to paycheck.
Less financial stress leads to less overall stress. And less stress leads to better health. When they can stop worrying about their day-to-day financial situations, employees have a bigger capacity to cope with other stressors. As a result, both their physical and mental health tend to improve.
Less stress and a healthier lifestyle can lead to lower healthcare costs. Lower bills continue to lessen an employee’s financial burden — it’s a positive feedback cycle.
Benefits to employers
Employees who know they’re cared for are much more likely to stick around. Employers who prioritize their workers’ financial health can expect higher retention rates.
Less financial stress leads to more productive employees. Financial stress causes a loss of about 11-14% of payroll costs as a result of low productivity and employee turnover.
Employee financial wellness can cut down on absenteeism. Again, less financial stress means healthier, happier employees. Plus, with more control over their financial situation, they’ll have the means to address the issues that may cause absenteeism — like paying for last-minute childcare.
Employees are starting to expect these benefits from their employers. By offering them, you make your workplace more appealing to job seekers.
Bring Employee Financial Wellness to Your Business
If you haven’t already, you should start to think about how you want to bring financial wellness to your own business. Because even if it seems trendy, we think it’s a trend that’s here to stay.
Start by assessing where your employees are financially. You can’t determine what their needs are if you don’t know what kinds of situations they’re in.
Then think about what financial wellness program features would benefit your employees the most. Retirement savings plans are typically the top benefit for employees but think about what else you could offer.
Make sure your employee financial wellness plan includes access to financial coaching. Financial benefits are great, but unless your employees understand how they can fit into their greater financial picture, they won’t be able to make the most of them.
At Financial Fitness Coaching, we do more than help small business owners master their own finances — we offer a Workplace Financial Wellness program that can be tailored to meet your employees’ unique needs. By covering topics like goal setting, debt repayment, and paying for college, we can help ease your employees’ financial stress.
To see how we can help you and your business prioritize employee financial wellness, email me at kristen@financialfitnesscoaching.com or simply schedule a free 20-minute Discovery Call on my calendar.