Money is a universal part of life. No matter where you go in the world, no matter what you like to do, you need money to live. As an employer, your number one responsibility to your employees is to pay them. Without a paycheck, you’d likely have a hard time keeping your any employees around, let alone your best.
And yet, even if you pay each of your employees at or above their market value, it is highly likely they are still struggling with their finances. This struggle affects more than just one individual or family. It can have far-reaching effects throughout your company.
According to a recent survey by Mercer, employers could lose up to $250 billion in lost wages due to worrying about money. So, what can your business do to lessen these worries? To improve your employees’ financial health?
An employer-provided financial wellness program can be critical for improving you staffs’ financial health. When considering how to build your financial wellness program, there are three central questions to ask:
- How will you get participation?
- What benefits will you include?
- How will you measure success?
How Will You Get Participation?
Financial wellness, like any employee benefit, is only valuable if employees participate in the program. Obviously, the best way to ensure participation in a financial wellness program is to make it mandatory.
Still, making your program mandatory can result in resentment by employees who have no desire to participate. If you don’t make the plan mandatory, incentives are a great way to boost participation. Some examples of relevant incentives, per SHRM, “can range from small, one-time bonuses to subsidized sessions with a financial planner.”
Another major factor on participation is how you communicate the program to your staff. What kind of communication will you primarily use? One-on-one meetings, groups chats, or electronic communications?
Many may believe that face-to-face contact would be the most desirable. But a recent survey conducted by Harris Poll found different results. The most preferred method of receiving assistance, at 49 percent, was online tools. As more millennials enter the workforce, every day, this preference is likely to continue to rise.
The final factor to consider, regarding plan participation, is whether or not the program will be run internally or not. Using a third-party administrator could be a bigger deal breaker than you may initially believe.
A third-party administrator is vital because of how employees feel about actually utilizing a financial wellness plan. A majority of employees, 60 percent, said they would not want their co-workers to know if they were to participate.
Because there is a negative stigma associated with financial issues, many workers are cautious about making this type of information public knowledge. For this reason, it can be crucial to use a third-party administrator. And the numbers back this fact up. Also in the Harris poll, 44 percent of employees said they would prefer a neutral third party as the plan administrator.
What Benefits Will You Include?
After you figure out how you’re going to get people to participate, it’s time to define your financial wellness plan. What benefits will the program include? How will these benefits help certain aspects of financial wellness?
1. Retirement Planning
Retirement is an important issue for every employee, especially in America. According to a report by the Economic Policy Institute, 1 in 3 Americans has $0 saved for retirement. Similarly, the median savings for all U.S. families is only $500.
Just offering a retirement plan to your staff, is no longer an option. Your employees need to know how much they should save. And what the best savings accounts are for their respective situations.
Retirement is confusing, and as your life changes, so too will your retirement plan. It’s important to know how various life events such as marriage or childbirth can affect your plans for retirement.
2. Healthcare Savings Education
If you’re like a majority of businesses, you likely offer health insurance as a benefit to your staff. But health insurance doesn’t solve all medical-related financial problems. Still, providing health insurance is a terrific place to start.
Last year, one in five working-age Americans with insurance experienced problems paying medical bills. This statistic demonstrates the value of medical costs planning and education. Even with coverage, employees need to be smart healthcare consumers.
Teach your staff the differences in plan types, medical providers, costs of care, and medical savings accounts. Understanding the complexities of your medical care is vital to keeping your medical costs down.
3. Incentives and Rewards
As we already said, incentives are a tremendous way to promote participation in your financial wellness program. Nobody turns down a reward, especially when it’s for improving your financial health.
4. Security and Fraud Protection
With the recent Equifax breach in mind, financial security and fraud protection is as necessary as it has ever been. In today’s digital world, your identity and money, are as vulnerable as ever. Educating your opponents on potential scams and fraud is imperative.
Similarly, provide your employees with identity and fraud detection services. These services provide early warning to potential cases of fraud. Early detection can help prevent the issue from spiraling out of control and saddling employees with copious amounts of debt.
5. Tailored Financial Education
In addition to healthcare savings education, provide a tailored financial education plan for individual team members. Automated and online educational tools are easy and relatively inexpensive. Still, they don’t offer the same level of service and relevance that a customized financial education plan does.
When training is tailored to meet an individual’s needs, it becomes especially useful. Nobody wants to listen to information that is irrelevant to their particular situation. This tool is also valuable because of its rarity. According to BenefitsPro, only 35 percent of employers offer this kind of standardized educational training.
6. Paying for School
College debt is only increasing for the average American. The average 2017 graduate will leave college with $37,172 of debt, which is up 6 percent from the previous year. As a whole, Americans owe almost $1.3 trillion in student loan debt.
College savings accounts and student loan debt repayment are two tools your company can offer that will help your employees manage this source of debt. Both of these devices help to alleviate the pressure that accompanies paying for college.
7. Debt Management
Today, debt is everywhere. Still, it’s important to know that there is good debt (like a home mortgage) or bad debt (like a credit card). Your employees need help understanding and managing both good and bad debt.
Credit card debt is especially prevalent. As of December 2016, the average U.S. credit card debt reached $16,061, according to NerdWallet. Similarly, according to a study by the Alliant Credit Union, 37 percent of respondents said that paying off credit card debt is one of their top financial goals.
Employees need to understand what good and bad debt are. A debt management program can help employees understand and manage their debt. If your employees can better manage their debt, they can reduce the stress and distraction it causes.
Read more about how to improve employees’ financial wellness.
How Will You Measure Success?
As with any employee benefit, it’s important to try and quantify the success of the plan. As SHRM put it, financial wellness programs, “will almost always compete with 401(k) and health benefits for resources.” For this reason, it’s essential to create a method to measure and quantify the success of your financial wellness program.
It doesn’t matter what method of measurement you ultimately choose. But once you select a method make sure you use the same method of measurement for every calculation. This continuity will ensure your data is comprable throughout time.
The Wrap
Personal finance is a universal part of life, yet financial wellness isn’t. But before you implement a program, make sure to answer the three questions we just covered. If you do, your financial wellness will pay off well.