Financial Wellness Programs for Employees: A Deep Dive

With increasing inflation and an impending recession, financial wellness programs for employees have become a necessity. For as many as 34% of employees, financial stress impacts their mental health. And for 48% of employees, making ends meet comfortably is a struggle. Amid such financial stress, workplaces are also bound to take a hit due to poor employee well-being, lower productivity, and lower employee satisfaction. However, with financial wellness programs, businesses can support their employees to live better lives and perform better at work.

Financial wellness programs educate employees about managing their finances and reducing financial troubles and burdens.

They build financial literacy and financial competence to improve employees’ financial management.

• Financial literacy is the basic understanding of how money works. This knowledge helps people to budget and spend their money efficiently.
• Financial competence is how well people can put their financial literacy to use to improve their finances such as saving, spending, and investing.

A financial wellness program might help with the following:

• Building savings
• Identifying and fixing spending behaviors and patterns
• Reducing or eliminating debt
• Building a good credit score
• Student loan repayment plans and provisions
• Financial crisis management

Financial problems have been shown to impact people in many different ways. It can lead to mental and physical health problems to low job satisfaction and more. Here are some benefits of financial wellness programs for employees so you can better understand their importance.

The stress caused by financial issues leads to physical and mental health problems in employees. 34% report it having a major impact on their mental health. 49% and 45% of employees have reported facing mental and physical health issues due to financial stress. Hence, a financial wellness program is better for employees’ overall well-being, keeping them happy and healthy.

Financially stable employees also take fewer leaves, preventing absenteeism and any losses to productivity from occurring.

Financial wellness programs also improve employees’ satisfaction with their employers as 78% of them have reported desiring financial support from their workplaces due to inflation.

Employees are naturally bound to look for more work or a different workplace if they cannot make ends meet. Conversely, if a job helps employees feel financially stable, they are more likely to stay. 68% of employees report that they will stay longer at a workplace that offers financial wellness benefits.

Financial wellness programs improve employees’ job satisfaction. For instance, 83% of employees who have received financial wellness training are satisfied with their jobs, however, only 63% of those who didn’t receive it are satisfied.

Lastly, combining all these factors, financial wellness programs for employees improve their productivity, thereby increasing the productivity of the workplace. On the flip side, US companies can lose up to $500 billion a year due to employees’ personal financial stress.

Financial wellness programs equip employees with the knowledge, skills, tools, and support they need to become financially secure and stable. They help employees with multiple areas of their lives, such as:

Managing Credit and Debt: Educating employees about how credit works, what impacts credit scores, how to manage or avoid loans, bankruptcy, etc.

Household Budgeting: Financial wellness programs also help employees with managing household expenses and budget according to their means and financial goals.

Building Savings: Additionally, financial wellness programs for employees give them tools and strategies for spending their money more frugally and saving sustainably and beneficially.

Investing: Employees are also educated about investing and the kind of investment plans that are best for their specific goals and career stage.

Taxes: Filing for taxes on time, understanding different types of taxes, and leveraging tax benefits can also be taught in financial well programs.

Insurance: Employees can also secure their lives further with good insurance plans based on their needs. Financial wellness programs cover different types of insurances and teach employees how to pick the best ones.

Since personal finances can vary depending on the stage of life someone is or the generation they belong to, not an entire workforce will have the same requirements. Instead, different demographics will have different requirements.

According to a study by TalentLMS, Enrich, and Topcheck, here are the top financial priorities for people from different generations:

• Gen Z: Retirement planning, emergency savings, investment programs, and meal allowance.
• Millennials: Retirement planning, emergency savings, and financial coaching/advising.
• Gen X: Retirement planning, emergency savings, and investment programs.
• Baby Boomer: Retirement planning, investment programs, and medical care cost planning.

Due to varying priorities, you should always conduct a thorough needs analysis within your organization to understand your workforce’s requirements.

Finally, let us look at what you can include in a financial wellness program for employees to enable them to become financially stable, secure, and free of debt.

One of the best ways to educate employees about financial wellness is to provide targeted financial wellness training that builds financial literacy and competence. The trainings can teach employees about budgeting, credit, taxes, loans, and good financial hygiene.

You can also offer hardship grants to employees for certain unexpected events that might be difficult to navigate independently, giving your employees an extra source of security as part of your financial wellness programs.

You can also incorporate interest-free loans into your financial wellness programs by letting employees buy necessary household and office appliances through the company and deducting the price from their pay over several months. This helps employees avoid credit card-debt.

Hosting webinars and workshops with finance experts is another strategy for your wellness program. Such events can have more focused topics, as well as employee-facilitator interactions, leading to meaningful discussions about financial wellness that cater to employees’ financial concerns.

You can also establish partnerships with financial planning companies so your employees have access to high-quality financial advisory, plans, and programs at discounted prices.

Similarly, you can establish partnerships with select businesses for employee discounts, so your employees can purchase products and services at lower prices. These discounts can even be offered for your company’s own products and services.

Lastly, your financial wellness program can include routine organization-wide financial goals that employees can participate in, taking away the decision-making component of budgeting out of the equation and giving them a pre-made goal or list of goals to adhere to in order to improve their finances.

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1. Which of the following does a financial wellness program seek to build?

• Financial literacy
• Financial competence
• Financial management
• All of the above

2. Financial struggles have been shown to impact employees’ mental and physical health.

• True
• False

3. Retirement planning is a top financial priority for all generations of workers.

• True
• False

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