Financial stress today is kind of like the Cucumber Melon scent from Bath & BodyWorks in the early 2000s. Despite its near ubiquity, seemingly nobody is talking about how bad it is. Unlike cucumber melon lotion though, the adverse effects of financial stress go beyond offended olfactory sensors. The effect financial stress can have on your workforce is extensive in both size and impact.
Per BenefitsPro, more than 70 percent of Americans report some level of financial stress at least once per month. In fact, according to a different BenefitsPro article, almost 50 percent of workers say they spend time dealing with personal finances. Also, these employees spend an average of 45 minutes at work, a day, managing their personal finances.
Similarly, according to a 2017 survey from Mercer, employers can lose up to $250 billion a year due to employees’ stress about their finances. Mercer found that approximately 5 percent of an organization’s total payroll is at risk, at any given time, from time unproductively spent worrying.
So, as an organization, how do you combat these effects? The answer is financial wellness. In this article, we’ll give you a concise financial wellness definition. Additionally, we’ll break down how to create a financial wellness plan of your own, and how is plan can advance your business results.
Financial Wellness Definition
Financial wellness, as defined by Financial Finesse, is a state of well-being where an individual has achieved minimal financial stress, established a strong financial foundation, and created an ongoing plan to help reach future financial goals.
Making a Financial Wellness Program
There are many ways you can build your organization’s financial wellness program. Still, to develop a quality plan, there are specific elements it should include.
1. Clear and Concise Actons
When it comes to financial wellness, your employees need clear and concise actions to follow. The financial industry can get confusing quick. Your staff needs a step-by-step plan to make this subject easier to understand. The easier your program is to understand, the easier your employees can maximize the effectiveness of their financial wellness plan.
2. Ask Participants What They Want/Need
If you want to provide the best financial wellness plan possible, a fundamental first step is asking what your employees want. The more catered your program is to your employees’ desires, the more likely this program is to succeed. To begin the process of discovering your employees’ financial wellness desires, give them an initial financial assessment.
A quick assessment can be a tremendous learning opportunity for employees too. This assessment gives the taker a breakdown of a person’s financial strengths and weaknesses. A financial evaluation can help people realize where they should focus their financial efforts.
For example, a person living paycheck-to-paycheck might be focusing too much on retirement rather than managing their consumer debt.
3. Make Financial Education Flexible
Flexibility is vital for the success of your financial wellness program. The more you can personalize your program for every individual, the more effective it is. There are several actions your firm can take to make your financial wellness plan more flexible.
First, make sure you provide financial education in multiple languages. According to the Chicago Tribune, the amount of non-English speaking citizens continues to grow. As of 2016, there were over 35 million U.S. citizens over 18 years old, who speak a language other than English at home. Support your non-native speakers and their families with bilingual education plans.
Second, create different types of educational tools for different generations. People prefer to learn via different methods. Some are visual learners, whereas others prefer an audio lecture. These differences in preferred learning method are especially prevalent when comparing generations.
Millennials, for example, are likely to prefer an online and mobile-accessible program. Baby boomers, on the other hand, are more likely to favor physical content such as worksheets or flyers. Another action you can use to improve your plan’s flexibility is to provide financial education to employees’ spouses.
True financial wellness isn’t possible if only one half of your household is properly educated on the subject. Include spouses in your financial education to ensure the entire family understands what your financial goals are and the steps you need to take to reach them.
4. Create a Budget and Track Spending
Creating a budget to track your monthly spending is critical for positive financial change. A monthly budget allows workers to see precisely where their money is going each month. This information can help individuals understand where they can cut back, and save money, in the future.
5. Provide Access to a Financial Coach
One of the essential steps, when creating a financial wellness plan, is to provide employees access to a financial coach. There are a lot of free resources you can offer your staff to boost their financial knowledge. Still, there’s no replacement for an unbiased, experienced financial guide.
Financial coaches give your employees confidence in a field that is otherwise full of doubt and second-guessing. These coaches give workers an outlet to discuss their ideas, or questions before they take any concrete actions. This coaching works to build confidence in your: financial knowledge, decision-making, and goal setting.
6. Use Quality Content
Your educational content needs to be informative as well as inspiring and motivating. Personal finance, according to BenefitsPro, is 80 percent behavior, and only 20 percent knowledge. Your employees need tangible “wins” to keep them motivated to reach their financial goals. So, if your content is solely informative, its impact is severely limited.
7. Try to Measure Return on Investment (ROI)
The final element your firm should include in its financial wellness plan is to measure the program’s ROI. Part of measuring your plan’s ROI should consist of a pre- and post-financial assessment. We’ve already covered the importance of a pre-assessment, but the post-test is just as significant.
A post-program assessment allows you to measure the change in employee behavior over the course of your financial wellness plan. Additionally, there are multiple analytics your firm should track to measure your program’s ROI. These benchmarking metrics include:
- Benefit adoption rates
- Engagement rates with your retirement plan
- Employee turnover
- Happiness/stress levels of employees
Employee surveys or interviews are typically the best methods to collect these metrics. Without this information, it’s difficult to know your financial wellness program’s effectiveness.
Financial stress is truly the Cucumber Melon lotion of the business world. It’s simultaneously everywhere, yet awful at the same time. Luckily for your firm, there’s a tangible solution, a financial wellness program.
Now that you know the financial wellness definition, you can institute a financial wellness plan of your own. Use financial wellness to wash away your employees’ financial stress; like a hose to someone slathered in Cucumber Melon lotion.