What is Financial Wellness?
Definitions of financial wellbeing vary to reflect individual viewpoints. Financial health often refers to having a stable financial status. A person who is financially secure should have enough money to cover all of their monthly, yearly, and daily needs. Being able to save money and put some away for unexpected expenses is another requirement for financial stability. In general, the individual shouldn’t experience tension or worry due to their financial status.
Unfortunately, the financial wellbeing of many employees is lacking. Long before the COVID-19 outbreak, employees were having financial issues, but the pandemic has made matters worse. According to the PWC analysis, the pandemic has negatively impacted 63% of employees’ financial wellness.
Many people are either unemployed or earning substantially less money than they were before to the COVID-19 epidemic. The worst inflation in more than 40 years was brought on by it, which also devastated the world economy.
Why Financial Well-Being Is Important
Your workers’ personal and professional lives and, consequently, your business are negatively impacted by financial hardship. Some of the factors that make financial security vital are outlined here.
- Attendance and Absence
Financial stress increases absenteeism and tardiness by 34%, according to the Society for Human Resource Management. When compared to their colleagues who are not concerned employees who worry about money miss almost twice as many days from work each year. Employees coming to work even if they are physically or psychologically ill might rise as a result of financial hardship. Presenteeism has a major impact on businesses and may be quite costly to them, despite the fact that it may seem less harmful since employees are physically present at work.
- Reduced Productivity
It should come as no surprise that financial stress decreases employee productivity given that it increases employee presenteeism, absenteeism, and illness. More than 10,000 people participated in a Salary Finance survey. According to Employees, financial stress among employees costs businesses $500 billion annually.
- Healthier and Happier Workers
For workers, worrying about money can lead to a variety of (severe) health concerns, ranging from melancholy and anxiety to ulcers and even cardiac difficulties.
In other words, if you can eliminate your employees’ financial concerns, you’ll be one step closer to a more productive and contented staff. Financial stress not only has an impact on the health and mood of the individual employee, but it eventually has an impact on their team and other coworkers as well.
Advantages of a Financial Wellness
With having a comprehensive and tailor-made financial wellness program not only will the employees get help from it but as an employer, you are bound to have some advantages as well.
Few of them are listed below:
1. Improved Employee Productivity
One of the top advantages that you will get is that there will be an increase in employee productivity. A financial program needs to offer-
- Budget counseling
- Debt reduction programs
- Student loan support
This will also help to reduce personal financial hardships.
Financial wellness programs save employees time from concerns over debts and many worries.
2. Increase in Employee Satisfaction
Employees have reported greater professional satisfaction when they have access to financial programs. Programs that let them set and achieve individual financial goals. It includes contributing to an investment plan, building an emergency fund, and much more.
An employee prepared for unexpected financial emergencies is more engaged at work. It is because they do not have to worry about their finances in the long term.
3. Greater Employee Retention
With the help of the financial wellness program, you are more likely to offer employee perks that help them stabilize their money. This will not only help them in the long run but will also help you in retaining your prized assets.
Employees are more likely to stay in your organization if they see that they will have a more significant helping hand with their finances. This increases retention and improves your company culture as well.
4. Strong Employee Recruitment
In the present era, the competition is high, and job-hopping a common trend. To reduce this, employers have to provide all the benefits and perks to keep their best talents.
Benefits like health insurance provide a strong sense of stability for the employees.
For a strong recruitment strategy, you need to provide support to employees’ finances. This, in turn, makes the millennials feel valued in the organization. Thus, leading to higher chances of recruitment in your company.
5. Reduced Absenteeism
With the rise of inflation rates, the cost of living has increased a lot. Due to which employees find it challenging to reach ends meet even if the job is a well-paid one.
This happens because employees rarely have a well-planned financial strategy for their spendings. It can further lead to stress, anxiety, and depression.
Employees might opt for secondary jobs to have some extra money. This might affect their presence in their main job leading to an increased number of absentees in your organization. This can be a significant problem for you and the company.
But you can change this situation for your employees by providing them with financial wellness lessons. These lessons will help them devise out an efficient budget for themselves which will, in the long run, allow them to avoid their financial woes.
4 Steps for launching a Financial Wellness Program
1. Concentrate on your Human-Resources Plan
A workplace financial wellness programme may be a strong tool to help you reach your organization’s strategic goals because financial stress can affect employee performance and job happiness. Consider implementing a financial wellness programme as part of your human resources strategy to address one of the fundamental causes of employee stress, which can manifest itself as decreased productivity, poorer employee morale, or a higher turnover rate. Everything from staff messaging to delivery method will be guided by a clear understanding of what you want to achieve.
2. Provide Engaging Tools
Attention spans are short, and time is tight. Give employees actionable, useful resources such as checklists, timelines, FAQs and tip sheets. Bundle information into annual enrollment, but also send reminders throughout the year. Consider contests, quizzes and fun live or virtual events to bring financial wellness topics and resources to life. Leverage internal resources such as marketing, social media and communications teams and employee resource groups.
3. Set specific Goals and Measure it
Share your goals with your employees and how you came up with them. Tell them you’ll be checking in to measure progress and get feedback. If people feel that they are part of something bigger than themselves, they might be more incentivized to be engaged. Note that their individual work on financial wellness helps your organization thrive and grow stronger, as employees feel more empowered and in control of their financial life.
4. Create Measurements and track your Progress
The same procedures that were used to establish employee needs may be utilised to assess the performance of your programme. Increasing involvement in retirement programmes, usage of flexible healthcare spending accounts, or attendance at various training sessions, for example, can all be indicators of increased risk. Remember that the most effective financial wellness programmes are those that modify both money attitudes and everyday actions in order to have a long-term impact.
Employers should also evaluate their performance in terms of their own internal objectives. Employee happiness is the most popular indicator, but to determine genuine return on investment, more particular measurements should be devised based on your unique HR objectives, such as competitiveness, retention, and employer branding.
Examples of Financial Wellness Programmes
Given how easy it is to teach your staff about their own money, this is one you might not immediately consider. It’s also an affordable (and occasionally even free) method to develop a fundamental financial health programme. How? Consider asking frequent visitors to provide workshops at work on subjects like budgeting, managing (student) debt, or money-saving strategies. You may also invite a member of your financial department to conduct a session, depending on the size of your business.
- Dedicated Alliances
Establishing collaboration with a business that specialises in employee financial planning is an additional choice. Depending on the financial resources you have available, you may, for instance, choose a partnership that provides your workers with services and knowledge to help them manage their money better at a (substantial) discount.
Use resources for financial wellbeing. It goes without saying that there are several software programmes out there that promise to help workers’ finances. These solutions can offer everything from tailored training and e-learning to increase your employees’ financial literacy, including individual coaching and on-demand financial advice.
This can clearly be an element of a financial wellbeing programme, even if I wouldn’t call it one. Even though it might sound unbelievable, several businesses do provide financial assistance to their employees. This can range from helping someone pay off their student loan debt to giving fertility support or making a donation toward adoption.