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 an impending recession, recent tech sector layoffs and rising inflation—all on the heels of a global pandemic and economic upheaval—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.
But now the thinking is going beyond that. There are a few new reasons why including financial wellness in your well-being program is so 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 2019 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.
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.
So what does financial wellness include?
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:
- Access to financial planners.
- 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.
- Tips on establishing and sticking to a monthly budget.
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 email@example.com.