As life and work become increasingly blended, employee benefit packages have transformed beyond basic medical, dental, life insurance, and retirement plans. They now support other aspects of well-being—like mental health, fitness, nutrition, and financial wellness. In this week’s blog, we focus on why financial support must be part of today’s employee benefits package.
When it comes to finances, many Americans are on shaky ground. According to a Bankrate survey, only 41% of Americans would be able to cover a $1,000 emergency with savings. A study conducted in March 2020 found that in the previous 12 months, 62% of U.S. adults had carried credit card debt and 6 in 10 adults found it difficult to minimize their debt.1 The pandemic has only made it worse. Right now, 67% of Americans feel financial stress, with 27% feeling “high levels” of financial stress.2
The good news is that employers are stepping into the role of providing financial education and support as part of the movement towards caring for the “whole employee.” In fact, a 2020 Bank of America report found that 62% of employers now feel “extremely” responsible for their employees’ financial wellness, up significantly from 13% in 2013. And 90% of surveyed employers planned on including financial wellness as part of their overall well-being strategy for 2021.3
What are financial wellness employee benefits?
When it comes to finances, employers have traditionally focused on helping employees prepare for retirement through 401(k) plans. But there are so many important financial decisions that take place in the intervening years—sticking to a budget, buying a home, sending kids to college—where employees must fend for themselves.
This is where financial wellness programs come in. A financial wellness program works a lot like the components of a well-being program: we provide participants with the education and tools they need to manage their health. The same holds true for financial wellness—if we give employees the tools they need to manage day-to-day finances, weather unplanned expenses, and help them plan and save for future milestones, we can hopefully ward off financial crises and ultimately improve their overall health and well-being.
Why financial wellness should be a must-have benefit for employees.
There are many reasons why financial wellness should be a benefit that employers offer their workforces. Here are just a few examples of why a financial wellness program is a must-have:
Employees want and expect it.
Three out of four employees want their workplace to provide more resources to help them with their overall financial wellness.4 And 6 in 10 say it’s their employer’s responsibility to make sure they’re healthy and financially secure.5
People may even start looking for another job if they don’t get the support they need. A PricewaterhouseCoopers 2021 Financial Wellness Survey found that employees whose financial stress has increased due to the pandemic are more likely to be attracted to another company that cares more about their 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 huge drain on productivity and affects the bottom line. Research shows that providing financial wellness support to employees can also positively impact employee engagement and loyalty, particularly for younger generations.
It boosts employee health and well-being.
Financial concerns, like other sources of stress, can affect employees’ physical and emotional health.6 According to the American Institute of Stress, physical effects might include increased irritability, mood swings, appetite changes, stomach issues, fatigue, and insomnia. Left unchecked, these symptoms may lead to mental health concerns like anxiety, depression, or even suicide. Providing support for financial wellness can improve the employee population’s health, reduce absenteeism, and possibly lower healthcare costs in the long run.
Resources and examples of financial wellness.
Whether you partner with an outside financial wellness provider or create an in-house program, you might consider offering employees:
- Online financial tools, calculators, and mobile apps to help with day-to-day budgeting, saving for college, retirement planning, and more.
- One-on-one financial counseling services to help employees solve immediate financial concerns and financial coaching services to help set goals for the future.
- In-person or virtual financial education classes and seminars led by financial experts on topics of interest, like smart investing or easy ways to save.
- Access to debt management services to help with student loan repayment or paying down credit card debt. Some employers are even providing direct financial assistance with repaying student loans.
- Short-term loans or wage advances, which allow employees to get access to low-interest cash in an emergency and then repay the loan through payroll deductions spaced out over time.
- An Employee Assistance Program, which typically features its own financial tools and resources, including things like help with identity theft.
And if you’re not sure what offerings would work best for your population, ask! Pulse surveys are a great way to find out what your employees want—and expect—you to help them with. Once you gather information on the kinds of financial wellness support they’re looking for, you can better cater your benefits to their specific needs—such as student loan payoff, saving for a house, budgeting for a growing family, or planning for retirement.
Does a financial wellness plan work?
Employer-sponsored financial wellness programs are relatively new and companies are just beginning to see data, but early indicators are that they do benefit employees and the organization.
Data from our financial wellness partner, iGrad Enrich, shows that financial wellness program users had a 23% decrease in financial stress over 12 months. This led to a reduction in absenteeism, presenteeism, HR admin costs, payroll taxes, healthcare premiums, workplace accidents, and employee turnover.7
In a study by SmartDollar, a financial wellness program, 90% of employers said that financial wellness benefits had positively impacted their workforce. Eighty-one percent of employers saw improvements in their teams since offering financial wellness programs, and 88% said their employees have reported less stress. Over 90% of employers in the survey said the benefits make them more attractive to prospective employees.
But ultimately, metrics aside, it comes down to how your populations view the support systems you offer. The more modalities, personalization, and education systems available, the more likely your workforce will actually use the benefits you provide. And when they do use the available resources, check in. You may see increased engagement and productivity, reduced absenteeism, lower turnover, and happier, healthier employees.
- Blog: What Is Financial Wellness and Why Is It So Important?
- 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