It’s no surprise to discover money is a leading source of worry among individuals. A PwC survey of workers in 2016 found over half (52%) said their current financial situation is stressful.
What is newsworthy is that financial stress is increasing. The number of people reporting financial stress in 2016 is six percentage points higher than 2015.
Employers should be aware of financial stress because their employees are bringing these problems into work. In many cases, financial stress leads to lack of focus, increased absences and lower productivity for the company.
Because of the connection between financial stress and workplace productivity, many employers are looking at programs to boost financial wellness. These programs can look different from company to company, but they all share the goal of helping workers learn ways to manage their money and lower the personal stress they may bring to work.
What is Financial Wellness?
As a concept, financial wellness can be thought of as the intersection where money and health meet. When you put this concept into practice, financial wellness programs become the vehicle employees can use to learn better ways to manage their finances and to build confidence in their ability to prepare for the future.
In developing better money management skills, workers would feel more capable in dealing with financial stress on their own and know where to find solutions to their pressing financial concerns.
Financial wellness programs should focus on a broad range of outcomes. The goals shouldn’t be limited to preparing for retirement or achieving a certain level of wealth. The outcomes should be holistic, covering immediate financial needs such as managing debt, building an emergency fund, planning for unexpected events and more.
What Does Financial Wellness Cover?
Money is often a critical component in most decisions people make throughout their lives. A comprehensive financial wellness program should seek to cover many of these decisions and show how one financial decision can have ripple effects in other areas of life.
For example, discussions about spending should cover the ins and outs of credit cards and personal loans. Explaining the costs of borrowing can help workers have greater control over their discretionary spending habits.
Lessons about saving should focus on the power of compounding and how employees can use the time to their benefit, building money and wealth for the future.
Understanding the link between income and benefits can help employees make smarter choices with the benefits offered by their employers and help improve their overall quality of life.
Finally, it’s important to talk about planning and investing, especially to help workers prepare adequately for retirement. This is an area where many people, particularly those in younger generations like Millennials, are very deficient in their knowledge.
Why Should Employers Care?
Many employers are generally concerned about the welfare and wellbeing of their employees. This is the reason given by 86% of companies for offering financial wellness programs in the workplace, according to an ADP survey.
For employers, it comes down helping their employees feel less stressed about money. For one, less financial stress can help improve morale in a workforce. In the PwC survey, 44% of workers said their loyalty to employers is influenced by how much the companies care about their financial wellbeing.
Two, lowering financial stress can help boost productivity. One in four workers reports being distracted at work by personal financial concerns, according to PwC. Among those bringing their financial stress to work, nearly half say they spend at least three hours on the job each week thinking about or dealing with these issues.
Finally, other employers are showing interest in adding financial wellness programs to their slate of employee benefits. Expanding these type of benefits may soon be key in helping employers attract and keep top talent in their workforce.
Tailor a Program Around Workers’ Needs
There are basic elements that should be a part of any workplace financial wellness program. But it’s also important to tailor a program to meet the specific needs of employees which give employers some flexibility in designing a program to be most effective in helping their workers lower their financial stress.
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