How to Develop an Effective Financial Wellness Strategy
59% of employees are more stressed about money than any other life stressor combined, as reported by the PwC 2019 Employee Wellness Survey. The reasons for this financial stress range from not having enough money in savings and being unable to meet monthly expenses, keep up with debt, or pay for college. One in four employees ranks a financial wellness benefit, including access to unbiased counselors, as the most desired employer benefit.
Your employees are stressed about the cost of living, student loan debt, the cost of supporting a family, and preparing for the future. Nevermind the stress of meeting the demands of their job responsibilities, balancing family obligations, striving for personal goals, and finding the time to enjoy this precious thing called life.
As an employer, you can help. Fostering a work environment that supports your employees’ financial wellness goals will remove a huge burden from their shoulders. By offering financial tools and resources they wouldn’t otherwise have access to, you’ll be empowering them to lessen their personal financial challenges and refocus on work. In the same PwC survey, 35% of employees said that issues with their personal finances have been a distraction at work and 49% of them spend 3+ hours a week dealing with their personal issues at work.
Personal finance curriculum is only required in twenty states. Once an adult enters the workforce, they are generally ill-equipped with the information they need to thrive financially, leaving many stressed and frustrated. This stress will affect your bottom line if you don’t step in and offer financial wellness benefits.
How can your organization improve workplace financial wellness? Here are some initial steps that will set your financial wellness program up for success and give you the opportunity to measure its effectiveness.
Step #1: Conduct a financial wellness survey.
This will help to determine your employees’ current financial needs and what services they most require. If your company already offers a financial wellness program, your employees may have access to a personal financial assessment for which you could obtain the results. If not, you could conduct an anonymous survey to gain insight into the services your employees need.
Step #2: Decide how you are going to measure your ROI.
83% of human resource professionals say financial stress negatively impacts employees’ work performance. Beyond the inability to focus, financial challenges contribute to absenteeism, strains on morale, declining physical and mental health, and can lead to turnover.
According to EY’s “Understanding the ROI of employee financial wellness”, organizations expect the return on investment (ROI) to justify the expense. When it comes to financial wellness programs, calculating that figure isn’t always an exact science, but you can set metrics and goals to help validate the investment you’re making into the financial wellness program (see below). A good barometer, and one which indicates that employees value the benefit enough to use it, is employee engagement.
Step #3: Keep your goals in mind.
As you implement a financial wellness initiative and measure its effectiveness, keep in mind that the core purpose of this program to elevate the financial health and well-being of each employee. Companies lose over $450 billion a year due to employee financial stress. A healthier employee is a win for everyone – the individual, their family, the company and the community.
Once you have identified your approach, it’s time to identify the right metrics for measuring success. Here are six ways you can determine if the workplace financial wellness is improving:
- Is there increased engagement with the financial wellness program products, services, tools, and resources?
- Are employees investing more into their HSAs or retirement plans? If you have access to data from an online money management tool, you’ll also be able to see if employees are increasing their personal savings.
- Is there is a change in the frequency of wage garnishments?
- Are you seeing less requests for 401(k) loans and payroll advances?
- Are there anecdotal success stories? Your HR team is usually the first place employees go if they are having trouble or wish to share a success. Consult with the team to get a pulse on how employees are doing and if their financial wellness is improving.
- Work with your financial wellness benefit provider to gather case studies and data to see if the efforts are working. It’s rewarding for the employee and employer to see employees reach their personal financial goals, especially with the support of employer benefits.
Real Behavioral Change
In one of our case studies, we took a deep dive into Monica’s financial situation. When Monica first enrolled in the FinFit program, she was in a financially vulnerable state. She was over the age of 35 and had less than $10,000 saved for retirement. After taking advantage of our educational courses, her confidence in her money management skills soared and her financial behaviors adjusted to match. Today, Monica invests 4-6% of her monthly earnings into her retirement account and saves 2% each month for emergencies. She retook our financial assessment and improved from a financially vulnerable state to financially healthy. Read more of our employee case studies.