How an Employee Financial Wellness Program Can Benefit Your Small Business
Financial well-being is a complex topic, with living expenses, debt, and health care costs all on the rise. Add to that the financial impact of the COVID-19 pandemic, and that means you may have employees more stressed about money than ever before.
Given potentially heightened concerns around finances, there’s a strong possibility that your staff could positively embrace a financial wellness program. Regardless of how well-compensated your staff may be, this type of resource can help them feel more financially confident and prepared for the future.
What is employee financial wellness?
Financial wellness or well-being refers to an employee’s overall financial health and knowledge. How well a worker can manage money impacts their morale, engagement, and productivity, among other factors, at work.
Why is financial wellness important?
Employees who have their finances in order (the ability to pay bills on time, have savings and emergency funds set up, etc.) are often in a better position to put their energy and focus on work, be more engaged, and stay productive. On the other hand, an employee who struggles financially may be unproductive if they have to deal with money matters during work hours. They may also be stressed or disengaged, which can cause a ripple effect throughout the rest of your staff.
What financial challenges do your employees need help with most?
Financial challenges can range from saving for a major life event – a wedding, first home, education, or retirement – to managing everyday expenses such as bills and debt payments. Employees may also struggle having little to no savings at all, and they may only fully understand the ramifications of this once an emergency comes up.
A lack of financial knowledge can hold anyone back. Left with few reliable resources like where to find information and get financial questions answered, your employees may continue to struggle. As diverse as your employees are, so too are their levels of financial knowledge. Each of them faces a unique situation. Common topics employees often need help with may include:
This could include creating a budget for the first time, getting expenses under control, and setting realistic goals for a household budget.
Managing credit and debt
Workers may want to better understand how credit works, credit score factors and credit history, student loans, refinancing, bankruptcy, and creating a personal financial strategy.
Investing topics may include planning for retirement, understanding different types of accounts available, and best places to get started based on age and goals.
Employees may be looking for help developing money-saving tips and strategies, creating an education savings plan, and how to choose between saving and investing.
This includes how to avoid tax-time errors, understanding deductions, and tax breaks for education, moving, and homeownership.
Understanding what type of insurance you need, life insurance options, and the details of long-term care and disability insurance.
Benefits of an employee financial wellness program
Financial wellness programs can have an immediate impact on employees’ money issues. More broadly, it can also have a long-term, positive impact on their contributions and engagement at work.
Help employees reduce stress
You may offer benefits that encourage healthy habits, but financial challenges can be a significant source of stress for employees. When team members face rising stress levels, it can have a negative impact on both their performance and productivity. Given that many employees are struggling as a result of the coronavirus pandemic, having adequate support can help employees manage stress and solve problems.
An employee struggling with a money issue may need to take time off to handle the problem or simply be too overwhelmed to focus on anything else. An effective financial wellness program aims to help employers mitigate absenteeism rates, since this can cost a small business in the form of the employee's pay rate, lost productivity, and the impact it has on remaining team members.
Employees who struggle with money may feel distracted by these burdens, which can make them unable to focus while working. Whether an employee is forced to deal with financial issues like contact from debt collectors during the workday or is mentally distracted by an inability to pay for a child's tuition, financial woes can have a direct impact on daily productivity.
Form a stronger personal bond with staff
An employee financial wellness program can be customized to address specific financial issues your employees may face at any given time. Survey your staff anonymously and ask what topics an employee financial wellness program could address to boost their financial confidence.
When you receive feedback about the topics of interest, structure the timing of programming to align with your team's personal financial goals and realities. For example, employees may express their need to build up savings in an emergency fund as a result of the coronavirus pandemic. The financial wellness program can offer introductory resources on how to create a budget or steps for setting up a savings account. The more relevant your financial wellness initiatives are to your staff, the more value your business can benefit from it.
What other ways can employers help employees enhance their financial wellness?
In addition to offering a financial wellness program, employers can consider offering the following benefits and resources that may help them make better money management decisions.
Split-to-save feature through direct deposit
If you offer direct deposit, you can encourage better saving habits with a split-to-save feature. This allows employees to designate a fixed portion or percentage of their paycheck each pay period into a designated account.
Auto-enrolling in a 401(k) plan
Offering a retirement plan is a powerful way for employers to help employees automate contributions for their non-working years. An auto-enrollment feature in a 401(k) plan takes this a step further: Eligible employees are automatically enrolled in the company’s plan at a default contribution rate — streamlining the enrollment process and still giving them the option to opt out if desired.
Employee assistance programs
An employee assistance program (EAP) can help employees resolve a variety of different issues that might be adversely affecting their work performance. From financial challenges to resources that assist in handling stress, an EAP provides a confidential source that employees and their families can use to find support.
Student loan assistance
Many Americans cite paying off student debt among their top financial goals. With this in mind, some employers have implemented student loan assistance as part of their employee benefits program. It works by offering eligible employees monthly contributions toward their student loans, along with resources to help manage their debt. You may want to consider this if you're looking to improve your employment value proposition to become an employer of choice among college-educated talent.
Employee wellness program
This is an employer-initiated approach to improve employee health and wellness by supporting and encouraging healthy behaviors. A wellness program may offer education, wellness challenges, biometric screenings, and anything else that can help staff make better lifestyle choices. While this is not a replacement for insurance, wellness programs are geared toward making proactive health decisions, which could help curb costly medical conditions down the line.
How to start a financial wellness program
During these difficult times, you may be limited in the number of benefits you can offer your workforce. But you can provide financial wellness resources to help make a lasting impact. For Paychex payroll clients, FinFit is a free program that enables employers to offer benefits such as a personal financial wellness assessment, online educational tools and resources, and even short-term employee loans for unexpected expenses.