A Guide To Financial Wellness Programs For Employees

Today’s employees face formidable financial challenges, including rising living costs, mounting debt, and broader economic uncertainties. These pressures create pervasive stress for 68% of employees, contributing to anxiety and making it difficult to concentrate on day-to-day job responsibilities.

Financial wellness programs in the workplace equip employees with the knowledge and tools to manage their finances effectively. By reducing financial stress and improving well-being, these programs enhance employees’ personal and professional lives and contribute to the organization’s success.

What Is Employee Financial Wellness?

Employee financial wellness is marked by thoughtful spending and saving that positively impact short-term and long-term goals. It encompasses the ability to effectively cover daily expenses, handle emergencies, and plan for future financial goals.

Financial wellness is a critical aspect of holistic well-being and directly impacts mental, emotional, and even physical health. When employees feel financially secure, stable, and confident, they are less likely to experience stress and anxiety, which can improve productivity and engagement at work.

What Does A Financial Wellness Program In The Workplace Look Like?

For employers looking to create long-term, sustainable changes in employees’ financial behaviors, research suggests that one-off events (i.e., annual financial wellness seminars) are insufficient. Instead, financial well-being must be treated like any other dimension of wellness, with year-round resources and support to encourage healthy behaviors.

Before business leaders can provide effective financial wellness benefits to their employees, they must first assess and understand the needs of their teams. Younger employees will likely value programs that offer opportunity for student loan debt consolidation, while those who have recently started families may favor programs that include health and life insurance policies.  Others may be more attracted to programs with retirement benefits.

While age and life stage are important factors in financial wellness, it is important to assess other demographic contributors as well. MetLife recommends the administration of surveys, focus groups, or observational methods to effectively gauge employee needs, knowledge, and financial competency to determine the appropriate level of intervention. The most successful financial wellness programs equally consider and tend to the current and future needs of all employees. Strong employee financial wellness programs typically include some or all of the following components:

Retirement Planning

Preparing for the future is a key aspect of long-term financial security. Retirement planning programs provide employees with the tools and resources to create a solid foundation for retirement, ensuring they can maintain their standard of living once they leave the workforce. This can include:

• Offering 401(k) plans with employer-matching contributions, incentivizing employees to save more and grow their savings over time. Consider automatically enrolling employees in these plans so they can start as soon as they are eligible without needing to take initial action.
• Providing information on individual retirement accounts (IRAs), including Roth and traditional IRAs, to give employees more options for retirement savings.
• Hosting workshops and seminars on retirement savings strategies, such as the benefits of compound interest, the impact of inflation, and the importance of starting early.

Savings Programs

Savings programs build a financial safety net to reduce the stress associated with unexpected expenses, such as medical emergencies or urgent home repairs. They also encourage employees to put aside money for significant life events like buying a home, funding education, or planning for a wedding. To support healthy saving habits, employers can:

• Offer automatic savings plans, where a portion of each paycheck is automatically deposited into a savings account.
• Provide emergency savings plans that supply employees with access to liquid funds, consider potential tax implications, and transfer between companies.
• Provide access to discounts on everyday purchases, travel, and entertainment.

Financial Counseling

Providing access to financial advisors allows employees to receive tailored guidance based on individual circumstances, needs, and goals. Financial counseling services often include:

• One-on-one sessions with certified financial planners to develop customized financial plans based on employees’ unique needs and goals.
• Assistance with budgeting and debt management to create realistic spending plans and implement strategies to pay down debt.
• Guidance on investment strategies, including selecting appropriate investment vehicles and understanding risk tolerance.

Student Loan Assistance

Student loan debt can be a significant source of stress for employees, impacting their financial well-being and overall job performance. Student loan assistance programs ease this burden with support and resources to accelerate repayment, enabling them to focus more on their professional responsibilities and long-term financial goals. These programs may include:

• Employer contributions to loan repayments, which can significantly reduce the time it takes for employees to pay off student debt.
• Offering refinancing options that allow employees to secure lower interest rates and better repayment terms.

Investing Education

Understanding the basics of stocks, bonds, mutual funds, and other investment vehicles can help employees build a diversified portfolio, aiding their long-term financial growth. To support them in navigating the financial market with confidence and clarity, consider implementing:

• Seminars and workshops that provide an overview of different investment options and strategies, helping employees understand how to grow their wealth over time.
• Online courses covering topics such as portfolio diversification and risk management.
• Investment simulation programs to practice trading in a risk-free virtual environment, helping employees gain practical experience and build confidence.

Perks And Additional Support

To go the extra mile in enhancing employees’ financial wellness, consider offering additional benefits that cater to various aspects of their lives, buffering against financial stress. A broad spectrum of support that meets diverse needs might include:

• Offering lifestyle spending accounts (LSAs) that can be used for various wellness and lifestyle expenses, such as fitness memberships or mental health services.
• Providing tuition reimbursement to cover the costs of courses or degrees and professional development stipends for certifications or conferences.
• Expanding family-friendly benefits to coverfertility treatments, adoption assistance, and childcare.
• Subsidizing commuting expenses for public transportation and parking.
• Offering pet insurance to help employees manage the costs of veterinary expenses.
• Partnering with businesses to offer discounts on products and services, like electronics, travel, and entertainment.

Benefits Of Employee Financial Wellness

Financially stressed employees often spend significant work hours distracted by money-related issues, which detracts from their productivity. One survey shows that US companies lose $500 billion annually due to employees’ financial stress. This financial insecurity can also result in increased absenteeism from stress-related health issues.

In contrast, financially secure employees experience less money-related anxiety, translating to increased engagement and productivity at work and fewer health-related absences. Moreover, employees who feel supported by their employers in managing their financial wellness are more likely to stay with the company, reducing turnover and fostering long-term loyalty.

Cost Of A Financial Wellness Program

The cost of implementing a financial wellness program can vary significantly based on size of the organization, level of customization, and services offered. Educational resources (e.g., seminars and webinars) and other financial tools (i.e., budgeting apps) are often free, and some can be accessed through third-party providers the company already uses, like a payroll service or 401(k) provider.

More comprehensive programs can incur greater costs associated with personalized financial coaching and partnerships with external providers. While the overall cost varies widely from organization to organization, investing in a financial wellness program improves employee financial health, reduces stress, and increases productivity, making it a valuable addition to workplace benefits.

Closing Thoughts

Investing in corporate financial wellness programs demonstrates a commitment to employees’ long-term well-being, growth, and success. By addressing the financial stressors that impact employees’ personal and professional lives, companies can foster a more engaged, productive, and loyal workforce. As the economic landscape continues to evolve, forward-thinking organizations will recognize the value of adapting and expanding their support, ensuring that their workforce is equipped to navigate challenges with confidence and resilience.