[This blog was contributed by FinFit]
Did you know 25% of employees would most like to see financial wellness added to their employee benefits?1 Employees want your help. And ultimately, financial wellness programs not only benefit the employee, they can directly impact your organization through increased productivity, a reduction in stress-related health claims and employee retention.
69% of employees are stressed over their finances and 72% of them admitted to worrying about personal finances at work. Employee financial stress can cost your company $2,000 per employee annually2.
How do you know if you’re offering a holistic financial wellness program?
Financial Wellness has matured into a recognizable employee benefit – but when it comes to understanding what holistic financial wellness programs should offer, the benefit is still in its infancy. Some organizations equate financial wellness to 401(k) and retirement savings plans. Some feel offering financial education is financial wellness. For others it means giving employees access to financial coaching and counseling.
So, what financial wellness services do your employees really want? All of the above, plus a growing list of financial wellness program components!
Effective financial wellness programs cannot take a siloed approach. A holistic financial wellness solution addresses and supports the key financial elements that impact an individual’s overall well-being: Spend, Save, Borrow and Plan.
Source: U.S. Financial Health Pulse, FHN
A holistic financial wellness plan must enable individuals to have visibility into their financial situation. In order to improve and enable behavioral change, employees must first be able to evaluate their current financial position to identify their baseline.
The next step is to assess specific areas where financial wellness assistance is needed – a true financial wellness program will provide recommendations and direction to encourage and drive improvement. Finally, the program must provide tools and resources that allow the individual to address these key pillars while motivating them to take action.
Financial wellness programs that solely focuses on investing and saving for the future ignores the shortcomings of many employees who are unable to manage their spending. They have financial challenges today; until they can move beyond their current financial challenge, they don’t have the capacity to plan for the future.
While a retirement plan is an important element of financial wellness, it is just one component of the Save pillar. There should also be educational courses and resources that support saving for everyday needs and unplanned, higher-cost expenses. At some point, it will rain – employees shouldn’t wait until that day to start a rainy-day fund!
The average American doesn’t have $400 in savings3. We must help individuals solve this challenge first.
Life happens. It’s okay (and logical) to lean on financial solutions when the options are clearly defined, and employees can select the most effective solution for their situation. Without cost-effective financial solutions, the average American will spend an average of $279,002 in interest payments4.
Providing employees with education on the credit rating system, borrowing terms, and how to consider borrowing options carefully will help them from spiraling into a path of debt.
It’s difficult to appropriately manage spending habits and save money at the same time. Employees need a plan, and the knowledge to define goals and identify their unique course of action. Financial educational resources and tools provide valuable information to help them create and manage budgets, prepare for life events and calculate how much they can comfortably afford to spend.
A financial wellness program that supports only some elements of Spend, Save, Borrow and Plan is not strong enough to stand alone. The resources within a true holistic financial wellness program must intertwine, creating synergy to support every aspect of an employee’s unique circumstance.
Learn more about PrismHR’s integration with FinFit to deliver financial wellness solutions for employees, and how to simplify benefits administration.
1) 2018 PwC survey
2) 2018 John Hancock Financial Stress Survey