Financial wellness was a huge concern for U.S. workers even before the pandemic added a brand new set of stressors. Employees dealing with financial stress may be distracted at work, disengaged, and develop health problems. This week’s blog explores what financial wellness means and why it’s so important for employers to offer this type of support as part of their well-being solution.
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?
Some might say finances are a personal matter, but there are good reasons why employers should be concerned about the state of their workforce’s financial wellness:
It’s a huge source of stress for younger generations.
Pricewaterhouse Coopers’ (PwC) 2021 Employee Financial Wellness Survey found that 72% of millennials and 68% of Gen Zers are experiencing increased financial stress due to the pandemic. In addition, PwC’s 2020 survey found that 40% of millennial employees have student loan(s); 74% say that their student loans have a moderate or significant impact on their ability to meet their other financial goals.
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.
It makes good business sense.
When employees are stressed about their finances, they’re more distracted at work. Financially stressed employees spend nearly three hours or more handling financial matters during the workday. Needless to say, this is a massive drain on productivity and impacts a company’s bottom line. Moreover, research shows that providing financial wellness support to employees can positively impact employee engagement and loyalty, particularly for younger generations.
What does financial wellness include?
Some of the more common components of a financial wellness program include:
- Tips on establishing and sticking to a monthly budget
- Basic financial literacy
- Counsel on how to reduce debt
- Credit counseling and understanding a credit score
- Planning for retirement, including understanding the major sources of retirement income like Social Security, 401(k), and savings
- Strategies for saving for college or a major purchase, like a home
- Student loan assistance
- Support for the high costs of child and elder care—a common source of financial stress for employees
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.
And this may sound overwhelming, but it really doesn’t have to be. For example, our clients utilize our financial education programs, host lunch & learns, organize chats with financial planners, and incentivize specific financial wellness activities within their programs to encourage their populations to use their offerings more often.
How does financial wellness affect health?
It’s not surprising that financial concerns, like other sources of stress, can significantly impact physical and emotional health.1 According to the American Institute of Stress, physical effects may include increased irritability, mood swings, appetite changes and stomach issues, fatigue, and/or insomnia.
If left unchecked, these symptoms can get worse and may lead to mental health concerns like anxiety, depression, or even suicide. As Kevin Crain, the head of workplace solutions integration at Bank of America, relates: “If an employee does not feel financially well, I can almost guarantee you they’re feeling emotionally insecure. And if they’re feeling emotionally insecure, medical science will show you that stress causes healthcare issues.”
Financial stress is an enormous concern for today’s employees. Employers who provide support for financial wellness can help stave off physical and mental health concerns down the road, and ensure a more productive, engaged workforce.
- Blog: Why Financial Wellness Must Be an Employee Benefit
- Blog: How Financial Stress Impacts Employees and How Employers Can Help
- Blog: Ways To Include Financial Wellness in Your Well-Being Program
- Blog: Financial Wellness Programs – No Longer Just a “Nice to Have”
- On-Demand Webinar: Improving Financial Wellness in the Workplace