financial wellness program

Why a Financial Wellness Program can Deliver Powerful Positive Results

We all know how much havoc stress can wreak on your life. But do you know how much stress can negatively impact your business? Per Mental Health America, stress costs employers $500 billion in lost productivity, annually. Financial stress, in particular, has a significant adverse effect on both your employees and business as a whole.

According to the Financial Fitness Group, over 80 percent of employees have been affected by financial stress. This financial stress alone costs U.S. businesses close to $300 billion a year in unscheduled absenteeism, reduced employee productivity, and higher employee turnover.

Clearly financial stress is wreaking havoc on your business. So what, as an employer, can you do to help employees dealing with financial stress. In this article, we’ll discuss the two leading sources of financial stress and its effects on your staff. Plus, we’ll define financial wellness, its benefits to a business, and how your company can improve its financial wellness plan.

 

2 Sources of Financial Stress

A 2018 survey from Bankrate found 69 percent of employees have lost sleep from time-to-time over something they’re worried about. And, the top concern for these employees was money. Another study by Enrich Financial Wellness delivered remarkably similar results.

According to the study, 49 percent of U.S. employees are concerned about their finances. Furthermore, 46 percent of employees consider finances their primary source of stress and 48 percent with financial stress are distracted at work. As an employer, it’s imperative to keep your employees safe and healthy.

financial stress

Research has determined those losing sleep are more prone to both depression and anxiety. Depression and anxiety, in turn, wreak havoc on an employee’s life and productivity. Depression costs employers up to $44 billion annually, and an estimated 200 million lost work days each year. The cost from sleep deprivation is even more significant to the U.S. economy at an estimated $411 billion a year, according to the Rand Institute.

So, we know people are worried about their finances, but what, precisely, about their finances has people worried? Your employees are likely to be worried about either near-term expenses or retirement. Per BenefitsPro, 65 percent of employees report that keeping up with monthly expenses represents their biggest financial worry. On the other hand, 64 percent of employees worry about running out of money in retirement.

If you’re a millennial who’s just entered the workforce, chances are you’ll be more focused on reducing near-term expenses or paying down debt. But, as you age, you become increasingly likely to think of retirement expenses. Here’s the good news. The solution for both financial worries is the same…

 

Read 15 reasons why you need financial wellness in your workplace

 

What is Financial Wellness?

Financial wellness, per 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.

 

How Can You Make An Effective Financial Wellness Program?

1. Provide an Initial Financial Test

There are several tips for employers to use to improve the effectiveness of their financial wellness program. The first is to give participants an initial financial assessment. A financial test can be an excellent learning opportunity for most employees. This exam can show staff where their financial strengths and weaknesses lie.

taking a test

2. Basic Financial Education

It’s imperative your employees understand the fundamentals of money management, so they have enough information to make the right financial decisions. For example, do your employees know how interest rates work and the power compound interest over time in their retirement savings?

A recent study from the FINRA Foundation pointed to just how necessary financial education is. According to the study, two-thirds of Americans would fail a financial literacy test. Regardless of the specific program, education is the best way to improve employee engagement with an employee benefit.

 

Read more about how to establish a financial wellness plan of your own. 

 

3. Create a Budget

Per, BenefitsPro, one of the best things your employees can do to learn more about their financial situation is also one of the easiest: create a budget for yourself. A budget allows workers to see precisely where their money is going each month. This information helps individuals understand where they can cut back, and save money, in the future.

 

4. Provide a Financial Coach

A crucial step when creating a financial wellness plan is to provide employees access to a financial coach. There’s a cornucopia of free or cheap financial resources available. But none quite compare to the power of 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.

 

5. Make 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, create different types of educational tools, with different content, for different generations. People prefer to learn via different methods. Some are visual learners, whereas others prefer an audio lecture. Similarly, we’ve already covered how different generations tend to have different financial goals.

So, for millennials, it makes sense to use online and mobile-accessible programs which cover topics such as debt management or student loan repayment. For baby boomers, physical content such as worksheets or flyers that focus on saving for retirement is likely to be most effective.

 

The Wrap

Whether your employees are worried about near-term expenses, or their retirement, chances are they could both benefit from participation in a financial wellness program. These programs can help reduce employees’ financial stress, boost productivity, improve employee engagement and retention, and reduce healthcare costs.

man and woman with dog

15 Reasons Why You Need Financial Wellness in the Workplace [Infographic]

It’s impossible to overstate the importance of financial wellness in the workplace. This benefit works to protect your employees financially, and otherwise. Finances and the stress they cause can have a substantial impact on your organization’s success.

According to a 2017 survey from Mercer, employers can lose up to $250 billion a year due to employees’ stress about their finances, alone. This survey found there is a real risk when workers spend time worrying about their finances. At any given time, approximately five percent of an organization’s total payroll is at risk.

If you let it, financial stress can dominate your workforce, and therefore your company’s bottom line. Luckily there are ways to battle back against financial stress. One of the best methods is to implement a financial wellness program.

These programs help to improve your staff’s financial education and create a long-term plan to reach future financial goals. Educating and planning for the future work together to lessen individual’s financial stress.

 

Financial Wellness in the Workplace

 

1. $500 Billion

Stress costs U.S. businesses a total of $500 billion a year in lost productivity, according to Mental Health America. This statistic demonstrates the immense adverse impact stress can have on your business.

 

2. #1 Cause

Finances, according to several studies, is the top cause of stress for American employees, young people, and couples. Again, each of these studies shows the powerful influence finances have on essentially everyone.

 

3. 54 Percent of Workers

According to PricewaterhouseCoopers, 54 percent of workers say they’re stressed out about finances. So, it’s likely in your company now, more than half of your employees are facing stress due to money.

 

4. 2/3 of Americans

A FINRA Foundation study found 2/3 of Americans would fail a financial literacy test. Without the proper financial education, your workers will struggle with even the most simple financial principles. Basic financial education has to be a part of your financial wellness program to combat the effects of financial stress.

wallet

 

5. 54 Percent of Employees

Per, PricewaterhouseCoopers, 54 percent of employees who identify as being financially stressed say they’ll likely use their retirement funds for expenses other than retirement. Those who are financially stressed are more likely to make financial mistakes.

A financial misstep, like early withdrawal from a retirement account, can be serious for individuals. And these financial missteps only grow in gravity with the age of the said individual. Financial wellness can help these individuals avoid such egregious financial.

 

6. 53 Percent of Workers

According to BenefitsPro, 53 percent of employees have skipped or postponed at least one healthcare issue, to save money. It’s important to remember a significant part of financial wellness is dependent on health.

Medical treatment and health insurance are costly, and good health can save you from the potentially astronomical cost of care in the U.S. Make sure your employees are educated healthcare consumers and they can save thousands of dollars over the course of even one year.

 

7. 5.5 Percent

The average worker, according to BenefitsPro, is only contributing 5.5 percent of their income into retirement. This figure is almost ten percent less than the typically recommended average of 15 percent. The fewer employees save for retirement, the longer they’ll have to work.

 

8. 50 Percent of Employees

Again, per BenefitsPro, almost 50 percent of workers acknowledge they spend time at work dealing with finances. In fact, these people spend an average of 45 minutes per day, or three hours a week, dealing with personal finances at work.

 

9. 78 Percent of Americans

Seventy-eight percent of Americans said they live paycheck to paycheck, according to a report from CareerBuilder. Those living paycheck to paycheck are more likely to be in debt and not saving for retirement or emergencies.

Lacking these savings increases the likelihood of your employees’ suffering financial stress. Most financial experts, for example, recommend having, at least, a six-month emergency fund. If a majority of your staff is living paycheck to paycheck they likely have nowhere near this amount of money saved.

 

10. 64 Percent of Workers

Over half, 64 percent, or workers in the U.S. can’t cover a $1,000 emergency without borrowing money. Similar to the previous number, this statistic demonstrates the inability of the average American to save money. Financial education services can give employees the knowledge and confidence necessary to avoid unnecessarily borrowing money.

 

11. 24 Percent of Take-Home Pay

The average U.S. employee spends 24 percent of their take-home pay on consumer debt payments. Similarly, last year, according to the Federal Reserve, the average American household carries $137,063 in debt. Both of these numbers demonstrate the amount debt influences American workers.

 

12. 50 Percent Reduction

In 2017, the Center for Retirement Research at Boston College found interesting results linking the gender savings gap and financial wellness and education. Their study found these services can reduce the gender savings gap by over 50 percent.

woman texting

This research showed financial literacy and implementing long-term financial education plans increased participation by women in retirement plans. Closing the gender savings gap is imperative for any firm wishing to achieve total employee financial wellness.

 

13. 40 Percent of Employers

According to research from the International Foundation of Employee Benefit Plans, almost half of U.S workers struggle with navigating their finances. This research found 40 percent of employers say their employees are only a little or not at all financially savvy.

 

14. 2 in 5 Employers

More than two in five employers report an increased demand for financial education from employees in the past 2 years. Employees are signaling they desire financial wellness and education more and more.

 

15. 19.2 and 56 Percent of Participants

According to Employee Benefit News, participants in financial wellness programs demonstrate real improvement in their financial knowledge. The percentage of participants felt “highly stressed” about personal finances fell from 52.4 percent to 19.2 percent after completion of a financial wellness program.

Similarly, 56 percent of these participants also said they believe they’re better able to manage monthly cash flow better after the completion of a financial wellness program.

 

The Wrap

Financial stress has a tangible, and sizable, impact on your firm’s bottom line. The above 15 statistics show the true influence of financial stress on your employees. Similarly, the demonstrate how a financial wellness program in the workplace can reverse these negative effects. Implement a financial wellness program and get your employees’ finances healthy.

financial wellness definition

Financial Wellness Definition: How This Benefit Boosts Business

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.

woman 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.

woman on phone

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.

person with a stack of books

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 coaching

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.

 

The Wrap

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.

Student Loan Debt: Solving Your Company’s Next Big Problem

Student loan debt, in 2018, has continued its climb. This month the Federal Reserve Bank of New York announced student debt now totals over $1.41 trillion in outstanding loans. Student debt is now the second largest source of household debt. In fact, student debt is the only form of consumer debt to grow preceding the Great Recession.

 

Student Loan Debt and Financial Wellness

A new study from a technology company, CommonBond, revealed interesting results regarding the effects of student loan debt and your employees’ financial wellness.

The numbers this study reported are eye-opening. Your employees both desire and value student loan repayment as an employee benefit. Still, student loan repayment, depending on its setup, can become expensive for a business.

So, as an organization, you have to decide whether this benefit is worth the price tag. When making this decision keep in mind the final stat from the above infographic. Only 50 percent of employees see their employer’s benefits offerings as innovative. Meanwhile, 71 percent of HR executives said the same thing.

Using effective benefits, like student loan debt repayment is a great place to lessen the divide between these two groups. This benefit can improve both employee productivity and perception of the company’s benefits plan.

 

Learn more about student loan debt repayment.

 

The Effects of Financial Stress

As previously stated, student debt is now the second greatest source of household debt. And this debt is likely having a more significant impact on your staff than you realize. Financial stress can wreak havoc on an employee’s health and productivity.

This kind of stress can result in increased anxiety and depression. Additionally, Cambridge Credit Counseling says financial stress can also worsen such health issues as:

  • Heart Disease/Attack
  • Gastrointestinal Problems
  • Weight Gain/Loss
  • Eating Disorders
  • Diabetes
  • Insomnia
  • Psoriasis
  • Cancer
  • High Blood Pressure

Financial stress has a similar adverse effect on a business. Last year, from Mercer, found that U.S. employers lose up to $250 billion in lost wages due to financial stress. According to the study the average employee spends 13 hours per month, at work, worrying about finances. And 16 percent of respondents, spent more than 20 hours.

The Financial Fitness Group has reported similar statistics that illustrate the impact of financial stress on the workplace. Financial Fitness reported financial stress is affecting a whopping 80 percent of employees. This stress, according to HR Dive, decreases employees’ productivity.

 

The Wrap

As student loan debt continues to build, the role of an employer in helping reduce this debt is only likely to grow. Controlling your financial wellness is important, but due to student loan debt, mostly unattainable for many on your staff. Help these employees, and your business overall, by implementing student loan debt repayment.

financial wellness program

3 Questions You Need to Answer for an Incredible Financial Wellness Program

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.

winner-medal

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.

counseling

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.

retirement

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.

security

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.

change stacks

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.

financial pressure

5 Employee Benefits that Relieve Financial Pressure (Infographic)

Five years ago the first Hunger Games movie premiered, Barak Obama was elected to his second term as President, and a bunch of people thought a Mayan-predicted apocalypse was nigh.

Also five years ago, was the last time that employees had felt the levels of financial pressure they are facing now. According to PwC’s 2016 Employee Financial Wellness Survey, employees are at the highest level of stress, due to finances, in five years.

Similarly, a Harris Poll conducted for Purchasing Power found that 80 percent of employees are under financial stress. And this financial pressure is like any other stress; it makes life more difficult.

Financial stress can cause employees to lose sleep. According to a study by Financial Finesse, 6 out of 10 employees lose sleep over their financial situations. As a result, the average employer suffers a loss of 11.3 days of productivity per year, per employee.

dollar bill

As a result, the average employer suffers a loss of 11.3 days of productivity per year, per employee. Not only does stress affect individual employees, it ends up negatively impacting your business as a whole.

Stress costs businesses an average of $300 billion a year due to stress-related healthcare and missed work. Money is one of the biggest stressors in life, which makes it a powerful influence in every individual’s life.

Helping your employees manage financial pressure is critical to a healthy and successful business. These are the top five benefits that will ease your employees’ financial stress.

 

5 Benefits that Relieve Financial Pressure

These benefits range in price but they all have one thing in common. Each can be an effective tool for combating the effects of depression and mental illness in the workplace.

Financial Stress

Feel free to share or embed this infographic on your own site. To embed click “Share”on the bottom left corner of the infographic, then simply copy and paste the code.

Learn more about the benefits that can relieve financial pressure.

financial stress

5 Benefits That Will Ease Your Employees’ Financial Stress

The almighty dollar. Money makes the world go ‘round, but it can also make your head spin ‘round. For a vast majority of us, a primary cause of stress is our finances.

According to PwC’s 2016 Employee Financial Wellness Survey, employees are at the highest level of stress, due to finances, in five years. A Harris Poll conducted for Purchasing Power found that 80 percent of employees are under financial stress.

This stress has a negative impact on both employees and their employers. Stress costs businesses an average of $300 billion a year due to stress-related healthcare and missed work.

workplace stress

Similarly, financial stress also causes employees to lose sleep. According to a study by Financial Finesse, 6 out of 10 employees lose sleep over their financial situations. As a result, the average employer suffers a loss of 11.3 days of productivity per year, per employee.

Helping your employees manage their financial stress is critical to a healthy and successful business. These are the top five benefits that will ease your employees’ financial stress.

 

1. Financial Literacy Education

One of the first, easiest, and best things your company can do to lessen your employees’ financial stress is to educate them on financial literacy.

The President’s Advisory Council on Financial Literacy defines financial literacy as “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.”

Financial literacy aids employees by giving them the knowledge and ability to reach self-sufficiency in their daily financial lives. If your employees are financially illiterate, according to Investopedia, they can fall victim to predatory lending, subprime mortgages, fraud, and high-interest rates.

All of these results of financial illiteracy can lead to poor finances and large amounts of financial stress. Your financial literacy education plan should teach employees the basics of personal finance that apply to their everyday lives.

 

2. Financial Counseling

The next benefit you can provide your employees to decrease their financial stress is credit counseling. Credit counseling allows employees to discuss their debt and credit with a trained financial professional.

This counseling can be hugely beneficial to your employees as national debt continues to rise. Credit card debt is especially prevalent in the U.S. As of December 2016, the average U.S. credit card debt reached $16,061, according to NerdWallet.

workplace stress

Additionally, in a study by the Alliant Credit Union, 37 percent of respondents named paying off credit card debt as one of their top financial goals. Your staff wants to eliminate their debt, and personalized financial counseling can help them do so.

Going through credit counseling gives your employees a personalized action plan, budget, repayment strategies, and targeted advice to help them deal with their credit and debt.

These tools allow your staff to understand their financial situation, and develop a plan to achieve their financial goals.

 

3. Retirement Savings

The most obvious, yet arguably the most important, benefit you can offer your employees is a retirement savings account. Retirement savings accounts come in two forms: defined contribution and defined benefits plan.

Defined contribution plans, such as a 401(k), give employees tax benefits while giving them an easy path to save for their retirement and their future. These accounts offer tax-based incentives that make it worthwhile for employees to save, and to save sooner rather than later.

Saving for retirement is an enormous issue for your staff today. According to Time, 1 in 3 Americans have $0 saved for retirement. On average, the median for all families in the U.S. is only $5,000, and the median for households with some savings is $60,000, according to CNBC.

Retirement savings are a serious source of stress for many Americans. A survey by Schwab Retirement Plan Services found that 40 percent of employees named saving enough money for a comfortable retirement as a significant source of stress.

 

4. College Savings Account

A college savings account, or 529 plan, is beneficial for anyone who plans on attending college or wants to support a relative or a friend who plans on attending college. College tuition is rising, and it is important to save, to prevent accruing massive amounts of debt.

These 529 plans give employees tax advantages for saving for college. Earnings are not subject to federal tax and are not subject to state tax when used for qualified education expenses.

Qualified education expenses can include tuition, fees, books, room and board, computer technology, and related services such as Internet access.

Students in the U.S. have racked up a collective $1.3 trillion in student loan debt. College savings accounts help your employees to avoid the stress of exorbitant school loans.

 

5. Student Loan Repayment

Similar to 529 plans, student loan repayment assistance helps your staff to ease the stress of accumulated student loans. The average graduate will leave college with $37,172 of student loan debt.

Student loan repayment is a voluntary benefit, offered by an employer, that pays back a portion of an employee’s student loan debt on a monthly or annual basis.

Typically, a company agrees to pay a specific amount each month, or in a lump sum after a certain amount of time. This money can be applied directly to the principal, which also helps to lower the amount of interest each month that an individual has to pay from that point on.

The American Psychological Association has reported that every year, since 2007, Americans have named money as their top source of stress every year. These five benefits can help your employees avoid the negative impact of financial stress.

 

Resources

https://www.irs.gov/uac/529-plans-questions-and-answers
https://www.credit.org/credit-counseling/
https://www.cambridge-credit.org/financial-stress.html
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/employees-financial-issues-affect-their-job-performance.aspx
http://www.benefitspro.com/2016/08/26/top-7-causes-of-financial-stress?ref=mostpopular&page_all=1
http://www.benefitspro.com/2016/08/23/how-much-is-employee-financial-stress-costing-your
financial wellness

Healthy Money – How to Improve Employees’ Financial Wellness

There is no annual physical, no routine checkups, no emergency room. There’s no set schedule or resources for individuals to monitor and maintain their financial well-being.

Because of this ambiguity, the onus lies on each to be responsible for their financial wellness. With a multitude of other factors to worry about in life, financial wellness is often an afterthought.

According to a study by LIMRA, only 28 percent of respondents said they are very confident about their ability to make important financial decisions.

Not only are employees not confident in their ability, but they are also not confident in their actual finances. A 2016 study by Bank of America found that 75 percent of employees gave indications that they are not financially secure.

Financial wellness is a facet of employees lives that employers should consider when making benefits decisions. An individual’s financial wellness can have a direct impact on their professional success, which can subsequently affect their organization’s success.

 

What is financial wellness?

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.

Financial wellness is important to your company because it has a direct impact on your employees. When an employee has poor financial wellness, other areas of their life suffer too.

Over half of employees say that they are stressed about their finances, according to a survey by PwC. Additionally, 45 percent say their worries have worsened over the past 12 months.

healthy employee habits

This stress can wreak havoc on an individual’s personal and professional life. And often the lines between these two worlds will begin to blur. Stress costs employers an average of $300 billion a year in stress-related health care and missed work.

 

How to improve financial wellness?

As an employer, there are a few steps you can take to nudge your employees along the path towards financial wellness. Here are five possible solutions.

 

1. Defined Contribution/Benefits Plan

One of the first and best methods of ensuring financial wellness is creating a defined contribution or benefits plan. Defined contribution plans, like a 401(k) allow employees tax benefits to save for their retirement.

Saving for retirement is important as it eases the burden that workers face when contemplating their future retirement. These plans offer tax-based incentives that make it worthwhile for employees to save, and to save sooner rather than later.

Some employers who offer a defined contribution plan may struggle with getting their employees to participate in the program. A way to boost participation in these plans is to have your employees opt out rather than opt in.

Opting out means that, upon their hire, an employee is automatically enrolled in the contribution plan. This automatic enrollment means that employees have to opt out of the contribution plan or they will stay enrolled in it as long as they’re employed.

 

2. Healthcare Savings Education

Unsurprisingly, offering health insurance to your employees helps them to avoid debt that stems from the cost of health care. Still, health insurance does not solve all medical-related financial problems.

Last year, one in five working-age Americans with insurance experienced problems paying medical bills. Additionally, during the past year, 31 percent of Americans took money out of retirement, college, or other long-term savings accounts to pay medical bills.

financial-wellness-program

These statistics elaborate the need that employees have for medical cost planning and education. Even with insurance, today’s medical landscape has pushed individuals to be smarter health care consumers.

Understanding the differences in plan types, providers, HSA, and FSAs is of the utmost importance. Educating your employees on these differences can help your employees from withdrawing money from other accounts, or going into debt.

 

3. Tailored Financial Education

Automated and online options are easy, quick, and relatively inexpensive, but they do not provide the same level of service and relevance that a customized financial education plan does.

When training is customized to meet an individual’s needs is when it becomes especially useful. Employees do not want to listen to information that is irrelevant to their particular situation.

This tool is also valuable because it is a differentiator that very few other companies have. According to BenefitsPro, only 35 percent of employers offer this kind of specialized educational training.

 

4. Debt Management Tools

Unfortunately, one of the constants in today’s society is debt. There are; however, a good kind of debt (such as a home mortgage) and a bad kind (such as a credit card). Your employees whether they are willing to admit it or not, need help to manage their debt.

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. Additionally, 22 percent stated that their top goal was just staying afloat with debt obligations.

Credit card debt especially prevalent in the U.S. As of December 2016, the average U.S. credit card debt reached $16,061, according to NerdWallet. Employees need to learn to minimize this kind of negative debt.

A program to help employees manage their debt would aid employees in reducing and properly managing this kind of bad debt. This management, in turn, would contribute to reducing the stress and distraction caused by looming debt.

 

5. College Savings/ Student Loan Debt Repayment

College debt is another large form of debt in this country. While student loans (unlike credit cards) are a form of good debt, the sheer amount the average person accumulates is staggering and can be a real burden.

The average 2016 graduate will leave college with $37,172 of debt, which is up 6 percent from last 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 tools help to alleviate the pressure that accompanies paying for college.

 

The Wrap

Every year since 2007, according to the American Psychological Association started its “Stress in America” report, Americans have named money as their top source of stress every year.

It is clear that money is a primary source of negative stress. This stress has a direct, negative, impact on employee productivity, satisfaction, and engagement.

According to a 2014 survey by PwC, around one out of four employees say that their finances have been a distraction at work. To free your staff from this potential burden, you need to support their financial wellness.

Not only is financial wellness the “right thing” to do, but it is also financially significant. SHRM estimates that employers can save up to $3 for every dollar spent on financial wellness programs.

Clearly, the best decision both on a personal and business level is financial wellness. So when faced with the choice don’t throw financial wellness down the well.