Importance of Financial Wellness

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Financial wellness, like physical wellness, isn’t something you should ignore. Instead, it’s a critical concept for anyone who wants to be knowledgeable and confident about their finances, and in fact, financial wellness is so important that more than half1 of employers now offer financial wellness programs to their workers.

Keeping track of expenses, making a budget and sticking to that budget are important in order to be financially responsible and independent. Improving your financial wellness now will help protect you from potentially stressful financial situations in the future.

Since financial health contributes to your overall well-being, many employers include resources in their employee benefits packages. Check your benefits information and see—you just may have everything you need to get started on your path to financial wellness!

4 Simple Steps to improve your Financial Health

Beyond resources you may already have at your fingertips, you can also spend time on your finances today. Take a few small steps to learn how to tackle your debt, sort out your savings and plan for the future. Financial health doesn’t have anything to do with how much money you earn–-it’s how you manage your money both short- and long-term.

  • Set Financial Goals

Earning, spending, and saving are all important aspects of money management. By taking a careful look at your money, you’ll be able to identify areas of spending that can be prioritised to help you achieve your financial goals. Finding the right balance that works for you is the key.

  • Start an Emergency Fund

Your emergency fund should normally be sufficient to cover three to four months of your average living expenditures. It may be difficult to set aside big sums each month depending on your present level of debt, but don’t give up. Set a realistic goal for yourself for the next three months and observe how you do. Then, for the next three months, and so on, you can change your target accordingly. Creating a liquid account with your bank is an excellent alternative to consider so you’re not just saving money at home. A liquid account allows you to access your funds immediately and without incurring any fees.

  • Create a Budget

You’ll be able to discover areas of unnecessary spending and prioritise money management that will help you accomplish your financial objectives if you create a monthly budget. Reviewing three main areas: your income, your savings, and your expenditure is the first step in creating a budget that meets your needs. Compare your monthly income to your important monthly bills, which include things like rent/mortgage, transit fees, outstanding credit balances, and your weekly grocery totals on average. Prioritizing your remaining balance can be as simple as identifying five critical areas of monthly spending.

You might be able to uncover areas where you can start saving money by eating out less frequently or cancelling pricey subscriptions. You can now start setting exact dollar amounts toward your financial goal, whether it’s paying off loans, saving for a new item or trip, or simply opening a new savings account, depending on the financial goal you’ve established. If at all possible, set aside a particular amount each pay period for savings. This can help you save for an emergency fund or a rainy day fund so you don’t have to live payroll to payroll.

  • Reduce Debt and/or Calculate your Debt-To-Income Ratio

Arrange your debts by balance, smallest to largest. Don’t worry about interest rates. Focus on the first balance on your list by paying as much as you can each month while making minimum payments on your other debts. Once you’ve paid it off, use the sum you were paying monthly on your next debt and so on until your debts are paid. When you finish that first debt, you’ll be motivated to end all your debt.

Advantages of a Financial Wellness Benefits

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.