Emerging Evidence Suggests that Financial Wellness Programs for Employers are Delivering Results.
Wondering about financial wellness training for employees? You are not alone. Many employers are beginning to discover the value of employer-sponsored financial wellness training for their employees. In the same way, employees are more productive and happy when they are physically well, they will be less stressed and more productive when they are financially well, too. And the benefits of employee financial wellness programs are now grounded in hard numbers. Forbes as well as Ramsey Solutions have completed or highlighted studies and the numbers are convincing. Employee financial wellness activities deliver eye-opening results for both employer and employee. It is a win-win for everyone. Let’s dig in.
Reasons for Promoting Financial Wellness in the Workplace
1. Many employees are not learning adequate financial skills on their own.
In fact, a 2021 workplace wellness survey found that roughly seven in 10 people believe that employers have a responsibility to make sure their employees are mentally, physically, and financially well. Wow. That is 70% of your employees that have tossed on your shoulders the responsibility to assure their financial wellness. Those numbers suggest a fast-moving change from personal responsibility to employer-focused. Here at Budget Coach USA we are committed to the advancement of personal financial literacy believing that it is the most effective path to personal financial accountability. But the fact remains that in our current hiring climate, prospective employees expect their employer to be involved in their financial wellness.
There is hope, however. The beauty of personal financial wellness is that once gained it naturally transitions the employee’s view of responsibility back to themselves. Financial wellness benefits for employees, as delivered via personal financial coaching, shifts the employee’s focus back to themselves as the primary driver of their own financial destiny. Just like a physical fitness program is designed to pay dividends to the employee’s health and reduce overall health insurance premiums, a financial wellness program for employees seeks and accomplishes the same thing. The ROI is clear.
2. Higher productivity levels
Nearly half (47%) of employees surveyed by the Employee Benefits Research Institute said that “worrying about finances distracts them from work.” A survey by Ramsey Solutions found that “45% of employees say that in the last year, they’ve been distracted at work due to financial problems.” It isn’t reasonable to assume that by improving an employee’s financial literacy thru financial wellness an employer can remove all distractions but some distractions can be reduced leading to increased productivity.
According to the 2022 Ramsey SmartDollar Employee Benefits Study …” Personal finance problems don’t stay personal—employee money stress follows them into work as well. More than one-third of employees report that they’ve missed work due to a financial problem. This affected workers at small (37%) and medium (41%) organizations even more than those working at large organizations (30%). Even more, employees have had their personal finance problems interfere with their work. Nearly half of employees (45%) say that in the last year, they’ve been distracted at work due to financial problems.”
Every business owner knows that personal problems in the workplace are the enemy of productivity. And while many businesses offer mental health benefits in consideration of this too many are not considering personal financial distress as a driver of lost productivity they have any control over. This is simply not true. Many services including Budget Coach USA offer personal financial coaching in support of both the employer and the employee. And employees are clamoring for it. Again, according to the SmartDollar survey, Just 1 in 4 employees currently has access to a financial wellness benefit from their employer. But for those who don’t have access, it’s among the top benefits they wish they had. Eight in 10 (79%) benefits decision-makers report that their employees’ personal financial problems have a negative impact on their work. In fact, nearly half (48%) say that financial stress has a significant impact on their employees.
A recent article in Forbes reported that 80% of employers felt that financial stress was lowering their employees’ performance level. That financial stress is leading to depression, panic attacks, and sleepless nights, all of which cause costly distractions adding up to some $500 billion annually.
Bottom line: Among the companies that have implemented financial wellness training for employees 90% say it’s one of the most impactful benefits to their employees. (Ramsey solutions)
3. Better Retention Rates
As we’ve already discussed, financial stress is taking its toll on the workforce. And the personal financial stress that many feel has little to do with the salaries they are paid. Lack of personal financial information leads to employees buying more house than they can afford or financing things that are better purchased thru advanced planning and saving. So when an employee jumps ship for a new job that pays more they seldom understand that it wasn’t math as much as it is behavior (and choices) that is causing their financial distress. And sadly, that new salary will only solve the issue temporarily.
Once an employee has control over their financial situation they are more apt to remain in a job they like than to seek another elsewhere under the illusion that a few more dollars will solve the problem. Of course, many employees will seek advancement in their career, as they should, but it is really about choices and that is where financial wellness activities for employees pay dividends.
What Most Financial Wellness Programs Don’t Understand About the Problem.
Most financial wellness training programs for employees tend to focus on math rather than behavior. When that happens we get bogged down in conversations about how much interest is too much, “responsible debt” and debt to income ratios. Most people who are in financial distress are not in that position because they are unable to do 3rd-grade math. They are in this position because they did not keep a budget, say no to purchases when needed and organize their priorities for long-term success. It isn’t a math problem. It is a behavior problem. Math has a place in personal finance but the biggest driver to debt and financial distress is the failure to understand basic budgeting principles and having the willpower to say “no”. The best financial wellness training for employees will focus on making and sticking to a budget, saving for emergencies, saying no to debt, keeping your home purchase in the proper ratio to your income and of course living debt free. Save the sophisticated discussions for another time. The best employee financial training programs place a heavy emphasis on budgets and behavior.
Why are Financial Wellness Activities for Employees are Needed?
Personal finance skills such as saving, investing, and avoiding debt at all costs are not passed down thru the generations like they were in the past. The accessibility of unsecured loans allows consumers to have much of what they want when they want it without the responsibility to adjust behavior and budgets to pay cash. But at what cost? Inadequately prepared employees are again borrowing to take vacations, buy vehicles and handle emergencies. Like it or not lenders will continue to push the envelope in search of higher profits and consumers (and our employees) will remain their target as long as it is profitable. The best antidote remains education.
Financial wellness programs for employees offered by Budget Coach USA teach them to save for emergencies, say no to unbudgeted purchases, eliminate debt and organize their income for future success so that they can ultimately build wealth.
