Financial Wellness- An Issue in Overall Employee Wellness
Financial wellness is a vital issue that all companies must address in their overall employee wellness initiative. Finance plays a substantial role in improving the holistic wellness of an employee. Often, this issue can take such precedence that it can even torment the mental health of individuals.
As such, it becomes imperative to handle this issue effectively. Financial wellness will not only enhance productivity but also the mental health of the workers as well. Therefore, it becomes crucial to include provisions for financial wellness in corporate wellness programs.
Here, we must first understand the concept of implementing financial wellness effectively.
What is Financial Wellness?
In layman's terms, it is the ability to effectively manage your economic life. It means spending within one's need and capacity, preparing emergency funds, planning for the future, and being well-informed enough to make sound financial habits.
All of these decisions account for the financial stability of the workers. Here, you, as employers, can also play a crucial part in helping these workers be financially stable and reduce financial stress.
You can assist your workers with the best market plans by collaborating with industry financial giants, spreading workplace awareness, etc. All this will help prepare your workforce for their work rather than running from company to company for quotes and advice.
The importance of this assistance for financial wellness can also be well-understood from different relevant statistics.
4 Principles of Financial Wellness
1. Making a budget
Building your financial well-being starts with creating and following a budget. It offers a guide for managing daily expenses, putting money aside for emergencies, and making plans for the future.
2. Debt Management
The difficulty of saving, investing, and long-term financial planning can be made easier by managing long-term debt and minimizing consumer debt. You may improve your credit score by managing your credit responsibly, which can open up better-borrowing terms for mortgages, vehicle loans, and other major purchases.
3. Investing and Savings
Retirement planning might benefit from long-term savings and investments since they offer financial security and peace of mind. Your ability to pay for house repairs, vacations, and other foreseeable costs with cash might help you avoid further debt.
4. Security and Insurance Coverage
You may safeguard your finances against unanticipated emergencies with insurance or emergency reserves. Fire, flood, and medical emergency losses are all covered by insurance. Contrarily, an emergency fund is used to address various situations. You can avoid using up your long-term savings or taking on debt by doing both.
Suggested Read: Achieving Financial Wellness Through Money Affirmations
Financial Wellness For HRs
The financial well-being of employees has an impact on employers as well. Financially anxious employees are less productive and less likely to stay employed.
According to PatMilligan, Senior Partner at Mercer -
- 20% of employees have had to resign because of financial stress
- 15% report spending at least 20 hours a month working on personal financial tasks at work.
- 22% report missing at least one day of work to deal with financial issues.
The Journal of Occupational and Environmental Medicine also estimates that lost production from employee absences costs organizations $348 daily. From that perspective, keeping staff members free from financial concerns can increase profitability.
Unfortunately, a lot of businesses, including those surveyed for the Center for Financial Services Innovation report, do not recognize the importance of taking a more comprehensive approach to their employees' financial fitness. This prevails until employees become dependent on emergency EAP services, driving up the cost of these programs and endangering the business's ability to support them.
Financial well-being can aid businesses in lowering needless costs associated with absence, missed productivity, and benefit-cost overruns. To increase their benefit offerings, employers can:
- Programs that improve financial literacy and assist staff in accumulating assets
- Bulletins and other recurring publications
- Planning courses for investments, retirement, further education, emergencies, and healthcare
- Programs on debt and credit
Businesses may recruit and keep top talent by offering a wider range of perks since happy employees are likelier to stick around for the long run. The path to financial stability is a lifelong one. Once within reach, businesses and employees may contribute to advancing financial well-being.
Establishing and cultivating financial fitness requires individual persistence and a supportive environment with accessible, high-quality financial services. Not only will this help businesses achieve advantages like increased loyalty, increased productivity, and lower costs, but it will also help employees balance living responsibly today with making wise plans for the future.
7 Stages To Financial Well-being
Everybody's definition of financial well-being is unique. All facets of your financial life should be considered if you want to invest in your future financial health and well-being.
1. Decide where you want to start
Without understanding where you are beginning, it might be challenging to determine where you are headed. To understand your spending patterns, perform a financial audit on yourself.
This includes credit card debt and education loans, living expenditures, savings accounts, and other items. The goal is to comprehend your spending patterns. In the process, you could discover something new about yourself.
Consider asking yourself these queries:
- What matters to you?
- What is insignificant?
- Where have you been making your investments?
- What does that say about the priorities you have in terms of money management?
- What potential growth areas do you see?
2. Make a spending strategy
In the process of achieving financial wellness, creating a budget is quite helpful. By making a spending plan, you're assisting yourself in making wise financial decisions.
3. Control your debt
Consumer debt has now reached historic levels in the era in which we live. It might seem overwhelming to pay for rent and your education loans. Financial freedom and stability depends on reducing or eliminating debt as quickly as feasible, such as debt from credit cards.
4. Create an emergency plan
Life is a surprise. It may alter drastically, as COVID-19 has taught us. It's crucial to have an emergency fund nest egg to draw on in case of unanticipated occurrences.
Financial professionals advise people to save three months' worth of spending. They advise saving six months' worth of living expenditures as part of an emergency fund for families.
5. Put money aside for future
Generally speaking, it's advised to set aside between 10% and 15% of your gross income for retirement. The precise amount may vary depending on the individual, but the earlier you can begin saving, the better. Even though they seem too distant in the future to consider now, it's crucial to consider your long-term financial goals.
6. Use the tools and resources at your disposal
Take advantage of any financial wellness programs that your workplace may provide. Ask your HR staff to determine whether any financial wellness programs are available. You could consult a financial advisor to ensure you get the most out of your assets.
7. Giving return
This aspect of financial well-being may seem paradoxical. According to research, giving back has its own unique set of mental health advantages. Give to causes you care about if you can.
You can make wise financial decisions for your financial well-being with the correct tools and resources.
Suggested Read: 12 Best Financial Literacy Books To Build Financial Confidence
Some Useful Financial Wellness Stats
A study published in Best Money Saves states that
- 50% of the workers spend more money than they earn.
- 37% of employees admit they have more debt than they can manage.
- 41% of the workers cite that they have little savings to cover even 3 months without pay.
Furthermore, a study by PWC will give you a fair idea of the current scene of financial wellness.
1. The Current State of Financial Health
When asked about their financial wellness state, the respondents responded:
- 34% of respondents stated they were not worried about their finances.
- 18% said that they are debt-free in their life.
- 16% are well-prepared to meet any unforeseen emergency.
- 16% cite that they have enough resources to make their life choices as they, please.
- 12% live paycheck-to-paycheck, wherein they can meet their expenses.
- 4% can take retirement instantly if they please.
2. Choice of Benefit in Financial Wellness Programs
On the question of the choice of financial benefits, the respondents replied:
- 27% said that they would like counseling for their financial goals.
- 26% would appreciate assistance in student loans.
- 17% cite that they would like to have proper knowledge of how to use financial wellness tools.
- 16% would like protection on aspects like identity theft and credit protection.
- 8% would prefer to have mobile access to all their financial benefits.
3. On the effects on Financial Wellness
The respondents were asked about the areas where they suffered from improper financial wellness. Respondents replied:
- 32% cite that bad financial wellness affected their health.
- 32% say that their relationship at home suffered due to financial wellness issues.
- 21% replied that their work got influenced.
- 10% say that financial wellness has effects on their absenteeism rate.
- 9% speak of other areas where they suffer from poor financial health.
These were some stats showing the overall results in financial wellness.
Judging by the stats above, providing the necessary financial wellness benefits is crucial to promoting and regulating your employees' well-being. Here, let's also briefly discuss some of the advantages of doing so.
Advantages of Financial Wellness for Employees
1. Improved Productivity
Taking care of certain problematic aspects like loan application assistance, student loan, debt reduction programs, financial counseling, etc., can free up a troubled mind. Workers who are not burdened with these thoughts can concentrate more on their work. It will ultimately help with employee productivity.
2. Employee Satisfaction
When you take care of your workers, it always positively impacts their employee satisfaction levels. By deciding on a few employee financial wellness benefits, you can be sure of a spike in employee or job satisfaction levels.
There is always a fear of losing your talented workers to other companies in the current competitive space. The main result of this outcome is because of dissatisfied workers. Here, one must be conscious of offering the best possible environment and benefits to keep the workforce happy.
It takes more than proper hiring strategies to get the best hire. It would be best if you attracted talent to your office, and nothing does it better than a competitive benefits package. By designing a few financial benefits in your package, you can be sure to attract the best available talent. It further helps to sign your desired candidate.
Poor financial wellness can harm workers both physically and mentally. Many workers resort to two jobs to make ends meet and other similar provisions. This tendency to work 24x7 affects employee health. The constant work can deteriorate one's mental health and physical health.
Ultimately, they end up tired and with loads of stress and diseases, resulting in decreased productivity. The health issue can also lead to massive absenteeism. By helping your workers be financially secure, you can take an enormous load off their minds. It can then help to lower absenteeism.
These were a few positives of having financial wellness benefits in your package.
Here, it is also essential to understand what benefits your workers require to design a holistic financial wellness benefits plan. To do this, you must ask your workers about their needs and decide accordingly.
Furthermore, it would help to make your workers aware of some employee financial wellness tips.
Suggested Read: Take The 52-Week Money Challenge And Watch Your Savings Grow
Financial wellness is a crucial part of a holistic wellness approach. As such, it must be an element of your employee wellness programs. As discussed above, it has many positive effects that can reap the rewards for your efforts in the long run.
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