Ensure Success With Your Financial Wellness Programs

With employment gains across all industries, the US economy saw 709,000 jobs created in December and November amid a surge in coronavirus cases. But even as more enter the workforce once again and see accelerated wage gains, a recent study by PwC found that financial worry remains the top cause of employee stress — above job, health, and relationship stress combined. 

This is bad news for employers, especially when we factor in an accelerated inflation rate of 7.5%, the highest it’s been since 1982, and that 70% of full-time employees find it difficult to meet monthly expenses. Financial stress can be distracting, and ultimately impact employee productivity and quality of work — which begs the question: how do you foster a culture of financial wellness and support during such critical times and in the future? Here are five ways to start

Consider Financial Education

Why are employees increasingly stressed out by their financial situations? It may have to do with the fact that 66% of adults are unable to answer more than three of the five questions correctly on a financial literacy test. Without a basic foundation, it’s no wonder that employees are confused about their finances and consequently, mismanage them. Financial literacy programs cover a broad range of topics — from basic budgeting and credit counseling, to learning how to save for retirement or a home mortgage. Equipping employees with a basic understanding of money management can lead to meaningful behavioral change and financial security.

Offer Financial Counseling

The pandemic may have caused a slew of financial hardships, but it also intensified existing ones (see our post, “How Financial Counseling Improves Employee Wellbeing.”) If you want to take financial literacy to the next level, counseling is a good second step. Financial counselors offer guidance to help people get out of debt, create an emergency fund, and catch up on bills that have gone unpaid. 

The same PwC study found that 51% of employees want to make their own financial decisions and have an expert validate their choices. Fortunately, it’s possible your employees already have access to such a resource, thanks to your Employee Assistance Program (EAP).

What is an Employee Assistance Program (EAP)? EAPs address problems likely to impact employee performance. From adoption assistance to legal counsel, if it can distress an employee, there’s probably a resource to address it.

With one in five employees waiting to seek guidance until they experience a financial crisis, proactively implementing resources like financial counseling will empower your workforce to seek assistance with financial planning, prevention, and intervention.

Help Employees Plan for the Future

Many workers are putting their dreams of retirement on the back burner because they’re experiencing deep financial strain. According to a survey of working-age Americans by the National Institute on Retirement Security, more than half (56%) are worried they won’t be able to achieve a financially secure retirement. 

According to one report, about 13% of millennials decreased their retirement plan contributions, while 11% withdrew money from their retirement accounts to pay for other expenses. For Generation X, 15% decreased their retirement contributions and 9% took a withdrawal. When we factor in the economic fallout from the pandemic, it’s not difficult to understand why these two groups have already dipped into retirement savings. Unlike prior generations, Gen X and millennials are the first two generations who are less likely to have access to pensions, a source of steady income that kicks in during retirement.

To support long-term saving and put their people at ease, employers can:

• Offer 401k financial assistance. Contributing to a 401k is one of the primary ways employees are saving for retirement. You can offer 401k matching options to encourage employees to contribute part of their salaries. Or, if this isn’t within reach, you can invest in educational resources, so employees know how to leverage these retirement accounts most effectively.

• Contribute to their HSAs. If an employer offers a high-deductible health plan (HDHP), small contributions can make a big impact. Funds accrued in a Health Savings Account can be used to pay for a number of eligible healthcare expenses.

• Automate savings. When workers are automatically enrolled in a savings plan, it’s likely they won’t think about it. Automatic contributions take away the need for people to decide whether they should save because they’re already doing it. If employees have to opt out — the very act of choosing not to save money could reduce the odds that they’ll follow through.

Get Creative with Financial Wellness Benefits

As financial wellness becomes a priority in the workplace, companies are coming up with creative benefits to address this issue. For instance, student loan repayment is a financial wellness benefit many companies are considering to attract and retain talent. This is a great idea since 45 million Americans carry some sort of student loan debt. As of July 2021, the average amount of student loan debt is $37,693.

Another top employee concern is healthcare. Employees across all generations — millennials in particular — are concerned that rising healthcare costs will impact their retirement. Health Savings Accounts (HSAs) are a benefit worth considering to help employees toward their financial wellness goals. They can help employees build emergency savings for healthcare expenses, or can even be used as a vehicle for retirement savings. Just make sure to invest in education with this benefit as well: of the 60% of employees covered by a high- or mid-deductible healthcare plan, only 38% of them are contributing to their HSAs. It’s another tax-free way to save money, so encourage your employees to contribute to and use their HSA. Your employees can integrate their HSAs into the HealthJoy experience and even get guidance from our healthcare concierges about usage and product eligibility.

Provide Access to Online Financial Management Tools

As an increasingly digital society, we’re seeing online financial management tools and robo-advisors abound. This can be anything from simple budgeting trackers to investment management platforms. These tools are a great option since one in four employees ranks a financial wellness benefit with access to unbiased counselors as a benefit they’d most like to see in the future.

Finally, if you’re worried about the utilization of your financial wellness program, don’t be! The PwC study found that 71% of those with employee financial wellness programs say they’ve used the benefit. The bigger problem is that only 24% of employees indicate that their employers offer such services, which shows that supply isn’t meeting demand. But by putting a few of the outlined steps into action, you can change that situation in no time and get employees one step closer to achieving financial health.

This post was first published in 2020 and was updated in 2022.