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 a holistic financial wellness program should offer, the benefit is still in its infancy. Some organizations equate financial wellness to their company 401(k) plan. Others consider it an educational program. And for others it involves financial advisors. In reality, an effective financial wellness program cannot take a siloed approach and call itself a holistic financial wellness solution. 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.
A holistic financial wellness plan must enable an individual to identify their financial goals, assess the specific areas where financial wellness assistance is needed, and provide tools and resources that allow the individual to address these key pillars.
A financial wellness program 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 401(k) plan is an important element of financial wellness, it is just one component of the Save pillar. There should also be education and resources that support saving for everyday needs and unplanned, higher-cost expenses, or in other words, a rainy day fund.
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 payments2. 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.