The declining state of employees’ financial health is causing concern for the individuals affected and their respective employers. Companies are realizing that single-point solutions such as 401(k) plans, employee assistance programs, and employer-funded programs do not provide the holistic support that employees need to thrive financially.
Because wage rates have not increased proportionately with the cost of living, a growing number of Americans are finding it challenging to cover basic health care costs and living expenses, let alone to effectively save and plan for retirement. In fact, today’s average wage has about the same purchasing power as it did forty years ago. Not surprisingly, the American Psychological Association reports that 62% of Americans are stressed about money. We’re seeing this stat consistently across the board – Americans are concerned about their financial health over anything else.
Emerging research is linking this financial stress to mental health. A recent study conducted by Yale University cites that some of the “mental health problems” are actually money problems. Annie Harper, PhD, the anthropologist and researcher behind the study, stated, “Almost everyone in our first study was in debt. Many were very stressed about it. We know that debt has a strong negative impact on mental health. If we solved people’s financial problems, I think many of their other problems would go away.”
Many research studies have been conducted around employee financial health, presenting organizations with a very clear picture of the challenges their employees are facing. While offering a 401(k) plan and health insurance does help, employees’ personal finances need more support from their employers in order to make their overall employment package commensurate with their financial demands.
Employers are realizing that financial wellness benefits are a necessary – and affordable – component of creating a thriving internal culture. In recent years, the number of companies offering financial wellness benefits has doubled and the number of Fintech solutions focused on financial health continues to increase. However, not all financial wellness solutions are created equal. Unlike single-point solutions, FinFit gives employers the ability to extend a more holistic financial wellness support system for their employees.
This approach begins with a comprehensive financial assessment of an employee’s current financial situation. Many individuals are unaware of their financial health status (or lack thereof) and do not know where to begin or what resources to access in order to improve it. Like one’s medical health, a doctor is required to assess the patient’s health during the exam to better understand the areas that require attention. The same applies to financial health.
In addition to an assessment, Fintech solutions can also offer immediate, online cash flow support allowing employees to access their wages before payday if they need it to cover expenses. Unlike payday lenders that charge exorbitant interest rates, FinFit’s WageNow and credit solutions provide cost-effective financial alternatives for employees minus the traditionally high-interest rates. The last thing a financial wellness solution should do is send the employee further into unmanageable debt. Unfortunately, single-point solutions often put the employee in a dangerous position because they aren’t presented with a comprehensive analysis of their situation that allows them to evaluate the best option or resource for their unique situation.
The effectiveness of financial tools and resources are only as good as the educational support that ensures employees are set up for success and understand their options. With 24/7, mobile-first digital programs like FinFit, employees have access to financial education resources when they need them. Appropriate assessment, recommendations and resources position employees to make more informed decisions around budgeting, saving, borrowing and investing for themselves and their families. In addition to digital tools, FinFit provides one-on-one financial coaching. This coaching, combined with the Fintech solutions, gives employees the opportunity to receive personalized, unbiased guidance from trained experts who are committed to helping clients transform their financial health.
The number of Fintech companies addressing financial health is growing daily, demonstrating a huge need in the marketplace. As a partner and thought leader for the Financial Health Network, FinFit works closely with their team to help educate the industry and ensure financial health is top-of-mind for employees and employers. This article demonstrates the importance of establishing positive habits in order to improve employees’ financial health. The Financial Health Network also encourages and supports Fintech innovation. In 2015, they established the FinLab accelerator in partnership with JP Morgan Chase to support emerging solutions like Medput, an employee benefit option that provides 0% financing for out-of-pocket medical bills.
The research shows an increasing number of employees across the country are proactively seeking financial education and management resources. Whether it’s retirement planning, financially caring for aging parents, or saving up for a home, families are overwhelmed with making ends meet while preparing for long-term financial planning. Employers are in a unique position to care for their employees by providing financial health resources to help them budget, save and build wealth. SHRM, the Society for Human Resource Management, said that “helping employees with their money is among top company priorities for 2020.” Implementing Fintech solutions, such as FinFit, is an effective method for supporting employees’ overall well-being and helping them achieve financial stability.