According to a recent study, one in four employees say their levels of debt are ruining their quality of life. 42 percent are saving nothing for healthcare expenses not covered by insurance. Only 34 percent rate their financial well-being positively. Employees clearly need help. The good news? Employers are responding. 83 percent now offer financial wellness programs.
However, the offerings of these financial wellness programs differ. Some may offer educational courses. Others, a financial dashboard and planning tools. Some include financial coaching. What should an employer look for when deciding on a financial wellness plan for their workforce?
The best financial wellness program is a holistic solution enabling each individual to identify their financial goals, assess the specific areas where financial wellness assistance is needed, and access tools and resources that allow them to achieve financial freedom. This financial wellness program supports the four key financial pillars that impact an individual’s overall well-being: Spend, Save, Borrow and Plan.
A financial wellness program that focuses solely on investing and saving for the future misses out on the shortcomings of those unable to manage their spending. 71 percent of American workers say they are in debt. 78 percent are living paycheck-to-paycheck. These employees are not focused on their future. They’re worried about paying this month’s rent.
An employee struggling with debt needs help with today’s challenges before they have they can develop the mindset to plan for the future. A financial wellness plan that addresses this gives employees resources to learn how to manage their debt, including real-world solutions to handle today’s financial challenges. These resources include online education courses, financial counseling, debt management programs, and other financial solutions to help them get back on their feet and in a more stable position to improve their overall financial well-being.
Saving for retirement is the top financial stress for Americans. Financial wellness programs should help employees make educated choices for saving, including education on 401(k) plans. Many employees don’t understand the benefits of a 401(k) plan such as pre-tax deduction and employer match.
While a retirement plan is an important element of financial wellness, it is not the only component of the Save pillar. The average American doesn’t even have $400 in their savings.
Educational courses and resources like budget calculators, financial dashboards, budgeting tools and savings programs are needed to get employees on track with saving for everyday needs and unplanned, higher cost expenses. Your employees might be amazed to see that they’re spending $200 a month on coffee when they could contribute a portion of that to a savings account.
There are times in an individual’s life, such as purchasing a home or vehicle, where borrowing is okay and may be the logical choice. A financial wellness program that addresses the need to borrow, provides employees with education on the credit rating system, borrowing terms and how to consider borrowing options carefully to help keep them from spiraling into a path of debt.
It’s hard to appropriately manage spending habits and save at the same time. Employees need a plan and the knowledge to define goals and identify their unique course of action. The best financial wellness programs assess an employee’s unique needs and provide a plan based on the employee’s financial goals. These programs support the employee’s goals by including the tools and resources, such as educational courses, financial dashboards, budget calculators and financial counseling to help employees achieve these goals.
With so many financial wellness plans to choose from, the process of finding the right solution can be overwhelming. Employers will achieve the greatest success in improving the overall well-being of their employees with a financial wellness program that acknowledges and supports improvement across all four of these key financial elements.
Looking for a holistic financial wellness program for your organization? Check out FinFit. Contact us to learn more.