Despite the fact that the United States is one of the richest countries, we also have the greatest wealth inequality.
Wealth is defined as the net worth of a family which includes things like income, savings, 401(k)s, and real estate. According to the Federal Reserve Bank of St. Louis, in 1989, the total household wealth in the U.S. was $32.87 trillion (2016 adjusted dollars). In 2016, the exact same measure amounted to $86.87 trillion. However, the wealth of the bottom 50% has decreased from an average of $21,000 to $16,000, now amounting to just 1% of the total wealth. To put it metaphorically, the pie of wealth is growing larger, but the distribution of its slices are being concentrated in the hands of a few.
As wealth inequality increases, many Americans are struggling to stay afloat and cover basic needs such as health care costs and living expenses. This is due to wages not remaining balanced with the cost of living.
Today’s real 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.
The above factors combined with the lack of personal financial education creates the perfect storm where an employee is unequipped to manage their own money (or yours).
Personal finance curriculum is only required in the public school systems of 20 states. For adults to receive financial guidance from a professional, the individual must have a substantial net-worth or income in order to afford professional services. Access to this invaluable information is nearly impossible to attain, keeping many adults stranded in the realm of trying to figure it out while struggling to make ends meet. According to Fortune magazine, ⅔ of adult Americans cannot pass a basic financial literacy exam. We are failing to give Americans the fundamental tools they need to survive, let alone thrive.
Financial wellness plays a crucial and important role in the lives of individual employees, as well as collective organizations. Financial wellness programs provide a holistic support system to help employees identify their financial situation and define a path towards financial stability and success. Some of the key educational components of a successful program include:
Companies who wish to see their employees thrive in the workplace recognize that this begins with employees appropriately manage their personal finances. The financial stress that many employees face impacts the company as well. It is reported that businesses lose $450 billion per year due to the financial stress of employees. Financial stress reduces productivity and often manifests into physical health ailments. Sometimes employees need financial resources beyond education and coaching. With 78% of employees living paycheck to paycheck, many Americans are up against financial challenges that require additional resources to help them get back on track. A holistic financial wellness program needs to offer not only the assessment and education, but also the opportunity for employees to solve their current financial challenges so they can begin to think about their future. Without tackling current financial challenges, we cannot expect employees to save or plan.
Offering a holistic financial wellness benefit to employees will go far to reduce stress and elevate the financial health of your entire team. Employees that are financially healthy will have increased productivity and increased focus leading to higher levels of creativity and innovation for the company. When an employee feels that the employer truly cares about their wellbeing, they are motivated to bring the best they have to the table out of appreciation.
Innovative companies are created, and sustained, because they recognize that their most important investment is their employees. Millions of Americans struggle with managing their finances and it can cause chronic stress. This stress impacts their focus, productivity, physical and mental health. Helping your employees succeed will boost your bottom line, elevate the team’s morale and go far to ensuring the company’s ability to stand the test of time.