A workplace benefits package that offers employees access to health, life, and disability insurance and a retirement savings plan can help support financial stability to some extent, but it doesn't address the other parts of employees' financial lives that may consume a considerable amount of their mental focus, energy, and time.
According to PwC's 2017 Employee Financial Wellness Survey, 46 percent of employees who reported themselves as being distracted by finances spent at least three hours a week at work thinking about or tending to personal finances. The most financially stressed employees are five times more likely to be distracted by personal finance issues at work, and twice as likely to miss work because of them.
The cumulative costs of employee financial stress can directly impact a business in the form of lost productivity, lower employee engagement during work hours, and absenteeism. Those are just a few of the reasons employee financial wellness programs were a popular workplace benefit in 2017, according to the Society for Human Resource Management (SHRM). Here's a closer look at why both employees and employers' businesses can benefit from an employee financial wellness initiative, and what such programs commonly entail.
Employers are a path to improved financial literacy.
There are a number of personal financial resources an employee could access outside of work, including books and online personal finance content, and guidance from a financial coach or financial advisor. But many simply won't take action without the help of an employer. In fact, research by economist Annamaria Lusardi reveals that while just 16 percent of Americans demonstrate a "relatively high" understanding of personal finance overall, financial knowledge is low even among older people who may have made a number of critical financial decisions.
This lack of proactive information-seeking by employees leaves employers in a tough position: Either offer ways to connect employees directly with the knowledge they need to improve their finances, or pay for their ignorance in the form of employee distraction and reduced engagement.
Basic financial knowledge is in high demand.
Best practices from successful employee financial programs indicate that programs that address basic financial topics like how to build an emergency savings fund, how to budget despite fluctuations in monthly income and expenses, and how to avoid costly debt may be the most relevant to employees' lives, regardless of their compensation.
Research by the Pew Charitable Trusts shows that even American households whose income should suggest financial stability should have at least $9,000 more in savings than they do.
In fact, just half of American households have any money saved in a liquid account that they could access without paying fees or a similar penalty.
An effective program doesn't require a large investment.
Unlike employee wellness programs that can require significant long-term investment in order to change unhealthy behaviors like smoking or a lack of physical activity, employee financial wellness programs can be easy and inexpensive to introduce and execute.A basic "lunch-and-learn" series that addresses fundamental topics like how to manage credit card or student loan debt, or how to build an emergency savings plan, can be led by financial professionals an employer already has on staff or with the support of a business's banking partner.
Many nonprofit financial literacy groups offer free educational tools that employers can use to support financial literacy programming. A business that wants to make a more significant investment in its program may opt to subscribe to game-design tools that can help make financial concepts and education more approachable and engaging for the user.
Customize the program to your employees' lives.
The more a business understands the financial challenges their employees face, the more impact the financial wellness program can have. Businesses with a significant employee population under the age of 30, for example, may opt to begin with topics about budgeting or paying off debt.
The earlier that younger employees are empowered to address these common financial hurdles, the more likely they are to be in a position to build savings, manage debt, and contribute to a workplace retirement plan later.
Businesses can gain insights into employees' financial needs with a simple, anonymous internal survey that asks which financial topics their staff would most benefit from learning more about, and what types of program formats they prefer. Employers may also improve program impact by allowing family members like spouses, children, and aging parents to participate.
Measure success and refine the program accordingly.
Because an employee financial wellness program inherently lends itself to numbers-driven goals, the return on investment can be easy to measure. Employers should encourage employees who participate in financial wellness programs to set personal goals, measure them consistently, and use social support from others in the company to encourage sustained participation. An employee who sets a goal to save $50 from each paycheck, for example, will see the immediate benefits of that commitment in just a few months. As employees reach and set goals, continue to monitor what other topics they'd like to learn about to keep the momentum strong.
The financial futures of your employees are too important to be left to chance. When you consider how much the benefits outweigh the costs, implementing an employee financial wellness program makes both dollars and sense. Employers are always seeking to increase employee engagement; providing financial education in the workplace can be an important way to do so.
