A recent study by PwC found 57% of employees say finances are the top cause of stress in their lives. While employers often can’t solve all of the problems that lead to financial stress, there are things we can do as organizations—and as leaders and managers—to begin to elevate the importance of financial wellness in the workplace and begin to normalize conversations about it, much as we have other aspects of employee well-being.
Stress relating to personal finances isn’t new. But with rising inflation, we’re hearing more and more about the need to help employees with financial wellness.
Traditionally, helping employees manage their personal finances wasn’t considered an employer’s responsibility. But when you consider how the effects of financial stress can spill over into the workplace—in the form of distraction, reduced productivity, and the effect on physical and mental health—it’s easy to understand why supporting employees in managing their finances makes good business sense.
What is financial wellness?
According to the Consumer Financial Protection Bureau, financial wellness means:
- Having control over day-to-day and month-to-month finances;
- Being able to absorb a financial shock;
- Being on track to meet financial goals; and
- Having the financial freedom to make the choices that allow one to enjoy life.
Why is financial wellness in the workplace important?
Employees now expect financial wellness benefits.
According to PwC, the vast majority of employees now want help with their finances. They see employers as a trusted, objective source for receiving reliable financial information, unlike banks or plan sponsors who may just be interested in generating revenue. In particular, employees want help with investing, financial education and access to a financial professional.1
It’s critical to note that help with financial wellness is very important to younger generations, who now make up the bulk of the workforce. A TIAA Financial Wellness Survey found that 65% of Gen Zers and 61% of millennials believe it is a company’s responsibility to help employees improve and maintain their financial wellness. As with mental health resources, the availability of financial wellness programs is now a differentiator for employers.
Employees who feel secure in their finances are more likely to be more engaged.
When employees are experiencing financial stress, engagement and morale can suffer. A MetLife survey found that employees who felt good about their financial health were happier (84% vs. 55%) and more engaged (78% vs. 53%).2 There’s also the cost of turnover. If employees are stressed about their financial situation and don’t feel their employer is supportive, they’re more likely to leave. The PwC study found that just 54% of financially stressed employees felt there was a promising future for them at their employer, and they were twice as likely to be looking for a new job.
But there’s also a diversity, equity and inclusion (DEI) aspect to financial wellness benefits. Today, most large employers have a DEI strategy or program in place to increase inclusion in the workplace. Offering financial wellness benefits to employees is yet another way to foster a more equitable experience. How? These benefits help to “level the playing field for all employee populations by empowering underrepresented groups, who are more likely to experience financial stress, to gain financial confidence and improve financial well-being for generations to come.”3 And, employees who feel more secure in their finances are likely to be more engaged and energized at work, and more likely to be positive ambassadors for future diverse recruits.
Attitudes around retirement are shifting.
Today’s Baby Boomers approach retirement fluidly—they are working well into their late 60s and 70s; perhaps scaling back work, but not exiting completely, or trying out a second career. Others have not saved enough to retire, so don’t plan to do so anytime soon. Nevertheless, members of this generation continue to look to employers to help them achieve greater financial wellness.
We all need to become more comfortable discussing financial health.
We’ve made great progress around normalizing the discussion of mental health in the workplace and I believe financial health will be next. Because financial wellness is so important to productivity and engagement on the job, it does fall to leaders and managers to “engage employees in conversations about financial issues in a healthy, supportive and inquisitive manner.”4 This will enable employers to point employees to the specific resources that can support them.
How to include financial wellness in your well-being program.
If your well-being program doesn’t include financial wellness, now is the time to consider adding it. Well-being is about so much more than eating healthy and getting regular exercise. It’s about waking up with a positive attitude, going to sleep knowing you’re financially secure and doing everything you can to keep stress at a minimum.
By incorporating comprehensive financial services into your workplace well-being program, you can improve organizational productivity, boost your profit margins and help your employees stop stressing about their finances so they can get back to what matters most — taking care of their health. While implementing a financial wellness program can come with challenges, it can certainly be achieved. To help you get started, I’ve listed the top five principles that guided us as we designed our financial wellness plan here at WebMD.
Consider every employee’s needs.
Your workforce includes people from many different backgrounds, life stages and financial needs. For example, some people may prioritize paying off student loans or saving for their first home, whereas others want to budget for a growing family, or plan for retirement. It’s important to consider all the perspectives of your population before designing your financial wellness programs. That way, you can build a comprehensive solution that includes tools and resources that everyone can benefit from.
Utilize the resources you have.
If you have a corporate well-being program, chances are it features some aspects of financial wellness. For example, our WebMD participants have access to financial wellness resources through our partner, iGrad Enrich. Your Employee Assistance Program also may include financial wellness tools and education. Your 401(k) administrator will also have resources you can tap into. There are plenty of workplace services available that can help your employees save money, reduce their monthly costs and prevent unnecessary financial stress.
Expand your offerings.
Once you determine what your employees need and what you already have, fill in the gaps by partnering with an external financial wellness provider or using widely available online resources. To truly make a difference in your employee’s financial health, you must do more than simply offer a budgeting tool, financial advising or short-term payday loans. You need to provide them with access to all of those things, plus financial literacy training, credit score monitoring, student loan programs, identity theft prevention classes and more.
Clearly communicate benefits.
It’s important to tie financial wellness into your well-being messaging. To help ensure that employees take advantage of any new offerings, make sure to have a regular cadence of communication throughout the year. Consider holding special events to tie into Financial Literacy Month or a themed event like sticking to a budget during the holidays. We hang posters around the office to create awareness, send emails to initiate engagement and even send postcards to communicate our program benefits to employees when they’re at home.
Pay attention to the numbers.
Surprisingly, a whopping 70 percent of employers with financial wellness programs don’t have formal measurements to assess their value.5 But, by tracking the success of your program, you can take advantage of a valuable opportunity. You will be able to assess the significance of your program, identify where improvements can be made, harness data to offer personalized options and so much more.
What makes a good workplace financial wellness program?
At a minimum, a good financial wellness program helps employees increase their financial knowledge and ability to manage personal and family finances. The most important goal is to help employees reduce the stress associated with financial uncertainty.
Some of the more common components of a financial wellness program include:
Financial education.
Teaching financial fundamentals can help alleviate some stress and empower your employees to set some financial goals for themselves. For example, how to set up and stick to a budget, how to create a long-term savings plan, concepts like interest rates and the time value of money—these are all valuable topics that a financial wellness program teaches. You can even bring in an expert to deliver talks during lunch & learns or webinars.
Retirement planning.
For those who are close to retirement, you should consider offering classes on retirement financial planning, retiree healthcare, and how to navigate retirement distributions when the time comes. For those planning for retirement, focus on spreading awareness about your 401(k) and any employer match programs you offer. People may be interested in learning more about setting up health savings accounts that set aside money for retiree healthcare, creating a retirement plan, and learning how much they should try to save before retiring. Consider inviting a professional from your 401(k) program to host a seminar to share information.
Debt counseling.
This could include assistance with consolidating debt, establishing a plan to pay it down, and education on interest rates and budgeting to help employees avoid future debt. It also helps employees cope with the stigma and stress of being in debt. This type of support is best done one-on-one with a financial counselor.
Financial counseling and coaching.
Financial counseling sessions may be more appropriate for employees who are experiencing an immediate financial crisis. Financial coaching helps employees set goals for the future and improve their current financial situation.6 Sessions can be in-person, over the phone, or via video.
Support for savings.
Aside from 401(k) plan retirement saving, employers can sponsor savings or investment plans and have contributions taken directly from paychecks. Not only does this make it convenient to participate, but it also gives employees the peace of mind that they’re placing their money with a reputable institution.
Short-term loans and accrued wage advances.
These help employees access credit or cash in an emergency—whether through a low-interest short-term loan or an advance on their pay. Both can then be repaid through payroll deductions spaced out over time.
Student loan debt assistance.
Paying back student loans can be frustrating. There is a lot of unfamiliar terminology, and when you have a problem, it’s hard to know whom to contact—the lender, the loan servicer, or the guarantor? So, simply providing organizational tools that pull in and consolidate all student loan data in one place can be a huge relief for your employees. You may also want to make loan consolidation services available so employees can investigate lowering their monthly payments.
Incentivize financial wellness.
Once you begin offering some aspects of a financial wellness program, consider adding them to your incentive strategy. For example, many of our clients reward their employees for attending a financial wellness lunch & learn or reading educational resources from their financial wellness partner. Incentivizing your new offerings will encourage employees to use and reap the benefits of them.
Improve financial wellness in the workplace with WebMD Health Services.
Financial stress is an enormous concern for today’s employees, and increasingly something employees want their employer to help with. Providing support for financial wellness can not only lead to gains in productivity and help stave off physical and mental health concerns down the road, it can also lead to a more inclusive and equitable workplace and a more productive, engaged workforce. Need help strategizing ways to include financial wellness in your well-being program? Contact us at connect@webmd.net.
