Human Resources and Benefits

Financial Wellness For Employees

Couple doing home finances during breakfast at home

According to a recent wellness survey, 72% of employees are stressed about their finances. Based on the survey, the top three causes of financial stress for employees are:

  • Rising inflation (79%)
  • Adequate retirement planning (59%)
  • Market volatility (56%)

Other stressors that rank high on the list include having sufficient emergency savings (55%) and paying off debt (44%).

What is Financial Wellness?

Financial wellness is a state in which an individual is able to meet their current and future financial obligations. When you have strong financial well-being, you feel secure in your financial future and are able to make choices that let you enjoy life.

Why Financial Wellness Matters in the Workplace

Financial matters are a leading cause of stress for employees and a major distraction at work. As an employer, you can alleviate some of that stress to help employees focus better. Employees who have strong financial well-being have higher engagement, increased productivity, fewer absences, and improved health and well-being.

Many employees are unprepared for an extended economic downturn or recession and may not have enough money saved to cover emergency expenses. As a result, employees are apt to use money held in their retirement plans to pay for those unexpected expenses—or make short-term financial decisions that may have a negative long-term impact.

More than half (56%) of American households would be unable to cover an unexpected expense of $1,000.

Employees often need general guidance on how to prioritize spending, pay bills, and handle creditors. As an employer, you have a unique opportunity to help your employees avoid poor financial decisions at the expense of their overall financial well-being.

How Employers Can Help

Time spent dealing with personal financial matters and the stress of the situation has a direct impact on employee productivity. Here are a few ways you can support the financial well-being of your employees:

  • Promote financial resources, including employee assistance programs (EAPs)—If your organization has access to a financial expert, promote those resources and remind employees to take advantage of those opportunities. Financial guidance and assistance are often components of an EAP. These services can connect employees with help to improve their financial well-being—including advice on budgeting, achieving healthy spending habits, loan consolidation, debt repayment, setting up an emergency fund, and more.
  • Educate employees about financial well-being—You can share relevant financial literacy content and consider initiatives to help educate employees about financial well-being. For example, consider offering workshops to educate employees and reiterate employer-provided financial resources. Topic examples include student loans, debt, credit, financial goals, emergency funds, and retirement.
  • Reiterate benefits—Similar to employee education, remind employees about all available benefits and highlight perks that can offer financial relief or savings. This is important whether benefits have changed or not. Since employees may consider dipping into their 401(k) savings to cover unexpected expenses, reinforce that a retirement plan is a long-term investment strategy and withdrawals today could negatively impact retirement plan savings in the long run.
  • Be transparent—Remain patient with your employees’ personal situations and be flexible as needed. Be transparent and honest about the organization and how it is performing. Incorporate financial support efforts into your internal communication initiatives to ensure employees are aware of the efforts and know how to participate or learn more.

Financial Wellness Benefits for Employees

There are a variety of financial wellness benefits you can offer your employees. To ensure your benefits align with the evolving needs of your employees, conduct surveys and/or focus groups. This will help you identify the financial benefits and programs that will help impact the current financial challenges your employees are facing.

Here are examples of employee benefits that support employees in building financial wellness:

  • Retirement plans
  • Life insurance
  • Health savings accounts
  • Emergency savings accounts (funded by payroll deductions)
  • Stock options
  • Short- and long-term disability insurance
  • Caregiver support (i.e., paid / unpaid leave for caregiving, flexible work arrangements)
  • Education benefits (i.e. tuition reimbursement, college savings plans, scholarship grants)
  • Financial planning, counseling, and education

In a recent survey by Ramsay Solutions, more than 80% of employees indicated that participating in a financial wellness program has had a positive impact on their finances. Financial wellness programs are typically an addition to standard employee benefits and go beyond retirement planning and investment advice. A strong financial wellness program should support employees in their personal, day-to-day financial concerns via counseling, coaching, and workshops (available online and/or in person). Some topics that are covered in a financial wellness program include:

  • Budgeting (personal and household)
  • Building short-term and emergency savings
  • Setting financial goals
  • Establishing or improving credit score
  • Reducing debt
  • Managing student loan repayment
  • Managing financial crisis (i.e. sudden medical emergency, extended unemployment, bankruptcy, divorce)
  • Spending behaviors and consumer attitudes

To learn more about implementing financial benefits and programs to support your employees, contact your Leavitt Group insurance advisor. 

References
https://www.hrmorning.com/articles/employee-financial-stress-high
https://www.brightplan.com/2022-wellness-barometer-survey
https://www.gobankingrates.com/money/jobs/employee-financial-wellness-programs-positive-impact/ 

Leavitt Group—national strength, local trust. Leavitt Group is the 14th largest independently held insurance brokerage in the United States. We pride ourselves on our experience and ability to help our clients succeed. Contact an agency near you

Leave a Reply

Your email address will not be published.