Cultivating a culture of wellness at organizations is a common trend for employers across the country.
In fact, according to the Employer Health Benefits 2018 Annual Survey, 82 percent of large firms and 53 percent of small firms offer some sort of wellness program.
Historically, many of these programs focus on physical well-being, with employers creating programs intended to encourage smoking cessation and exercising.
Unfortunately, health-conscious employers and employees alike often overlook one important component to wellness: financial health.
The Hard Truth about Financial Wellness
A recent Bankrate survey revealed that 65 percent of Americans save little or nothing at all from paycheck to paycheck. This compounded with the fact that over 40 percent of Americans have less than $10,000 saved for when they retire, is alarming.
How Can Employers Help with Financial Wellness
When employees are stressed about money and saving for their long-term goals, the long-term stress can be detrimental to their overall health of workplace engagement.
Investing in employee financial wellness can be beneficial to both you and your employees.
Consider implementing a financial wellness program that focuses on planning for the future and budgeting. You may want to bring in a financial expert or consultant for your employees as well.
What is Financial Wellness?
Financial wellness is the balance between having enough money to cover recurring expenses, while still saving enough to support yourself down the road - particularly during retirement. Much like physical wellness, financial wellness takes hard work. You can’t expect to run a marathon if you don’t train, just like you can’t expect to have a comfortable retirement if you don’t invest.
Employees must understand that investing in personal financial wellness is the key to a secure financial future.
Why is Financial Wellness Important?
The road to financial wellness can be tough, but the benefits make it worth it. Consider how scary unexpected expenses are. They make you choose between something you want to buy and something you need to buy. For example, a car accident may force you to put off a vacation because you need a vehicle to get to work.
Financial wellness reminds you to save often because you never know what unexpected events may be around the corner. If you focus on financial wellness, you have to worry less about hidden costs because you’re already preparing yourself by saving money. Ideally, if you save enough, you’ll have plenty to cover surprise costs and your retirement.
Moreover, financial wellness is important because the majority of Americans cannot pass a financial literacy test, according to a Financial Industry Regulatory Authority (FINRA) study. The FINRA study found that many people had trouble calculating interest and putting away money for emergencies
This underscores how badly employees need financial education. It’s one thing to offer financial services like a defined contribution plan, but it’s another to inform employees about financial issues like when to take out a loan.
How to Educate Your Employees on Financial Wellness
Financial uncertainty can be extremely debilitating for your employees. It creates stress that distracts from the workplace and causes rifts that could have been prevented by proactive financial education.
Even simple instruction like saving or budgeting tips can go a long way.
Think about employee financial education another way: offering financial wellness tools can enable employees to get the most out of their benefits, most notably their employer-sponsored retirement plans.
Why bother offering such plans if employees aren’t maximizing their value? With this in mind, consider pairing your conventional retirement plans with other financial wellness programs.
How to Facilitate Financial Wellness
Employee financial education looks different based on employer, but over 80 percent of employers offer some sort of financial wellness program, according to a study from Prudential. The study notes that common programs include retirement and saving calculators, and access to financial advisors. These programs can help employees understand basic financial concepts and avoid risky decisions, like payday loans.
You don’t need to spend thousands of dollars to implement an effective employee financial education campaign. Even small, informative offerings can be enough to get employees thinking about their savings goals.
Here’s a few ways you can start encouraging financial wellness:
Hold a class on budgeting basics.
Distribute surveys about financial concepts to gauge employee understanding.
Offer access to financial planners through your employee assistance program.
Distribute worksheets to help employees plan for their savings goals.
Provide access to debt calculators.
Hold a meeting to explain retirement benefits before open enrollment.
A financial wellness program could be a critical component to your overall employee wellness initiative. It’s for this reason that we’ve included a Financial Wellness Toolkit that will help you inform your employees about the importance of financial wellness. The materials inside this financial wellness toolkit help answer important questions like how to start saving, how to understand retirement plans and how to stay out of debt. Together, we can help your employees maximize their retirement benefits and enjoy a more stable financial future.
Components of this article were adapted from Zywave. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.