Employee Financial Wellness: Supporting Employee Financial Health
- Employee financial wellness refers to the ability of employees to manage their finances, make sound financial decisions, plan for financial goals, and prepare for retirement.
- Many employees report increased financial anxiety as a result of recent layoffs, increased inflation, and product shortages.
- Employers have begun to offer a range of financial wellness solutions, including educational resources, access to financial counseling, and affordable loan assistance services to help employees take control of their financial health.
- In addition to giving employees greater peace of mind, financial wellness benefits help employers build greater morale, productivity, and retention.
In the U.S., employers have always played an important role in supporting the health of their employees. In particular, many companies have subsidized some or all employee health insurance costs. Following the COVID-19 pandemic, many employers began moving beyond health insurance to offer more expansive wellness programs for services that often aren’t covered by insurance, such as additional fertility and mental health benefits. More recently, a new type of employee benefit has become more popular among employers looking to build a healthier workforce — financial wellness benefits. The emergence of financial wellness benefits couldn’t come at a better time for employees. Global economic challenges have led to dramatic spikes in prices for consumer goods in the U.S., as well as widespread layoffs and an overall sluggish economy. Economic challenges have taken a toll on employees’ mental health, which often results in lower performance at work. Not only can employee financial wellness programs help those struggling with their finances, but they also can help employees achieve other goals, such as paying off student debt, fertility treatments, or cosmetic surgery. In this article, we’ll explore the concept of employee financial wellness, why it matters, and how to support employee financial health.
What is Employee Financial Wellness?
Employee financial wellness is a broad term that refers to an employee's overall financial health. There are many components that ultimately determine an employees’ financial wellness, such as their ability to effectively manage their finances, make sound financial decisions, plan for any specific financial goals, and adequately prepare for retirement. Financial wellness goes beyond the ability to pay bills. It's about having control over one's finances and the peace of mind that comes from being prepared for the future.
Many employers already provide some financial wellness benefits to their employees by offering 401(k) retirement plans. Employee financial wellness programs, however, go beyond financial help for retirement to include a wide range of options for employees to improve their overall financial situations, including education programs, counseling services, and loan assistance programs.
Why is Employee Financial Wellness Important?
In the U.S., beyond the stress of work, employees often worry about living expenses, home and car loans, and healthcare costs, among other things. The current economy has only heightened their stress, leading to anxiety, depression, and other health issues for employees. Unfortunately, many employees find that their personal financial worries have a negative impact on their work performance. According to PwC’s 2022 Employee Financial Wellness survey, nearly one in five employees say financial worries impact their performance. And 55 percent of financially stressed employees said they spend more than three hours at work each week dealing with financial issues. Unfortunately, financially stressed employees are more likely to experience distractions at work, absenteeism, and decreased productivity. Some may choose to leave their jobs. Supporting employee financial wellness can help employers reduce these negative outcomes, leading to a more engaged and productive workforce.
Employee Financial Wellness Explained
For many people, mental health is tied to financial health. Heading into 2023, employees have had to deal with increased unemployment, high rates of inflation, and product shortages, making it difficult to manage budgets. For many, significant life events — some expected, some not — can lead to a financial crisis. Examples include a divorce or sudden disability, as well as events that aren’t typically covered by insurance, such as adoption, infertility, and caring for elderly parents. Unfortunately, many employees are on their own when it comes to managing their finances and are reluctant to proactively seek help because of social stigmas or a perceived lack of knowledge. When presented with financial wellness benefits at work, however, employees may be more willing to take advantage of the opportunity.
The Benefits of Supporting Employee Financial Wellness
The most important goal of employee financial wellness benefits programs is to give employees greater peace of mind about their financial futures. Less employee financial stress also helps employers in a number of ways, including:
Improved Job Performance and Satisfaction
A 2022 American Psychology Association report said overall employee stress costs companies $300 billion a year. In the same report, 65 percent of employees said money was a significant source of stress — higher than at any point since 2015. Thankfully, employee financial wellness programs can help. In a recent survey, 83 percent of employees who received financial wellness training said they’re satisfied with their job, as opposed to 63 percent for those who didn’t receive training. The same survey noted that 67 percent who received financial wellness training said it helped their productivity, while 8 in 10 said it helped them focus at work.
Reduced Stress and Anxiety
The underlying reason why employee wellness programs improve productivity and retention is that they work. In a report from Nudge, a employer financial education provider, employees who received personal financial assistance at work were almost three times as likely to have more money in their savings accounts and almost two times as likely to have reduced debt as those who didn’t receive assistance. Employee financial wellness programs also lead to an overall reduction in stress. Research from TalentLMS found that 71 percent of employees surveyed said financial wellness training helped reduce financial stress.
Increased Employee Loyalty and Retention
Employee benefits increase employee loyalty and retention, and financial wellness benefits are no different. Conversely, a lack of benefits can increase turnover. In the 2022 PwC Employee Financial Wellness Survey, 38 percent of employees who reported stress about finances said they’d look for another job. When employees reported no financial stress, however, only 16 percent said they’d look elsewhere. When executed well, employee financial benefits can have a ripple effect, lowering stress levels, which in turn leads to higher productivity and job satisfaction. The final ripple is improved retention. The Nudge survey revealed that employees were also almost twice as likely to say they were more committed to their employer if they had received financial wellness benefits.
How to Support Employee Financial Wellness
Demand for employer-sponsored financial education tools increased 63 percent in the last year, according to the Nudge report. Unfortunately, while employers recognize the positive impact financial wellness benefits can have on morale and productivity, they’re struggling to keep up with demand. Less than a quarter of employers in a recent survey by the Society for Human Resource Management said they currently offer non-retirement financial benefits. For many, it’s an issue of organizational ownership. Diversity, equity, and inclusion (DEI); environmental, social and governance (ESG); and employee benefits departments each play a role in executing financial wellness programs. A lack of coordination, however, can cause inefficiencies and make benchmarking and progress difficult. To improve financial wellness across the organization, leaders must work collectively to break barriers and ensure an integrated approach. Here are a few ways employers can support their employees' financial wellness:
1. Offer Financial Education and Resources
Providing financial education and resources can help employees better understand their finances and make informed decisions about their money. This could include offering financial workshops, seminars, or online resources on specific topics, such as budgeting, saving for retirement, and paying off student loans. Providing access to financial resources, such as compound interest calculators, apps, and books, can also be helpful. The key to educating employees about finance is engagement. Start by getting employees actively involved in the program using a survey to gauge interests. Communication is also key. Consider sending employees regular updates and checklists related to the program.
2. Provide Access to Financial Tools and Services
Employers can provide access to financial tools and services, such as online budgeting and saving apps, investment platforms, or access to affordable loans or financial coaching services. These can include financial planning services, debt counseling, or access to financial advisors. Financial benefits can also include services that help employees with costs not covered by insurance, such as infertility treatments, as well as elective procedures, such as cosmetic surgery. The key for employee engagement is personalization. Some may feel embarrassed about their financial situation or their lack of financial understanding, and may feel reluctant to use employer services for fear of losing their privacy. It’s critical that employees know their use of the financial wellness program is private and confidential.
3. Encourage Open Communication
Encouraging open communication around financial wellness reduces the stigma around money-related stress and encourages employees to seek help. Consider providing a confidential hotline or resources for employees to seek assistance with financial issues. Also, consider a marketing plan for the financial wellness program, which can include an official name, logo, and slogan. Infographics posted throughout offices can highlight the benefits of the program. Remember that one size doesn’t fit all with communication. Employees’ financial challenges are unique and their levels of financial understanding are varied. Tailor the message to each group to show them how the benefits will help their unique situations.
How Future Family Helps Companies Improve Employee Financial Wellness
Future Family helps companies establish strong employee financial wellness programs by providing inclusive, flexible coverage for fertility, family-building, and out-of-pocket healthcare expenses. That includes helping employees with infertility treatments, genetic testing, gestational carrier services, cancer treatment, plastic and reconstructive surgery, dental/orthodontics, behavioral health, orthopedics, weight-loss treatment, hormone testing and therapy, and medication and medical equipment, among others. With no upfront cost, employers can extend $50,000 in coverage for each employee, with access to personalized concierge support.
Supporting employee financial wellness is an important aspect of promoting a healthy and productive workforce. By providing education, resources, and support for your employees' financial health, employers can help reduce employee financial stress and improve overall well-being.
What is employee financial wellness?
Employee financial wellness refers to an employee's overall financial health. Financial wellness goes beyond the ability to pay bills. It's about having a sense of control over one's finances and the peace of mind that comes from being prepared for the future. Financial wellness is often linked with the ability to effectively manage finances, make sound financial decisions, plan for any specific financial goals, and adequately prepare for retirement.
What is the importance of employee financial wellness?
Financial stress can lead to anxiety, depression, and other health issues for employees. Unfortunately, many employees find that their personal financial worries have a negative impact on their work performance. On the other hand, improved financial wellness can lead to higher productivity, job satisfaction, and company loyalty.
How do you promote financial wellness for employees?
To improve employee engagement in a financial wellness program, consider building a marketing and internal communications plan that includes an official name, logo, and slogan. Use infographics posted throughout offices to highlight plan benefits. Make sure to target the plan to specific audiences, such as various age groups and genders. Tailor the message to each group to show them how the benefits will help their unique situations.
What are some examples of financial wellness?
Examples of financial health include maintaining a budget; paying off debt; establishing an emergency fund with three to six months' worth of expenses in the case of an emergency; regularly saving for retirement; making wise, profitable investments, such as real estate or stable equities; and having adequate insurance coverage for health, life, disability, and other potential risks.