With inflation at a 40-year high in the U.S., employee financial wellness is gaining more traction in workplaces as a benefit employers offer to attract and retain employees. Employers benefit from offering such perks, too, as reduced financial stress means happier and more productive employees. HR software suites and standalone tools — such as Gusto, LearnLux, Gradifi, and Enrich — are rising to the occasion to meet the growing demand for employee financial wellness programs.
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Expanding the Definition of Employee Wellness
Companies commonly offer benefits to promote employees’ physical and mental health; however, the ability to effectively manage one’s finances also affects stress levels. Financial wellness is, therefore, an important aspect of someone’s overall health and well-being.
The U.S. Consumer Financial Protection Bureau defines financial wellness as the ability to:
- Budget and manage credit card cycles for current and future financial obligations
- Save and invest to feel secure about one’s financial future
- Build and leverage financial literacy to make informed financial choices that allow one to enjoy life
Financial literacy is a separate but related set of skills that are necessary for achieving financial wellness. Financial literacy entails a range of knowledge and practices for discerning the best financial choices for one’s current and aspirational situation.
Building up an individual’s financial literacy helps them:
- Make informed financial decisions
- Manage money to cover routine and surprise expenses
- Prevent the accumulation of debt due to interest rates on unpaid balances
- Plan for big purchases or financing activities like buying a home or building an investment portfiolio
How Financial Wellness Programs Address Employee Stress
When employees are stressed out financially, they’re less productive, their absences increase, their job satisfaction decreases, and their health can even be adversely affected.
According to a 2022 PWC survey, financial issues have the most impact on employees’ mental health, which precipitates downstream effects on productivity and job satisfaction. Employees who say money problems have a severe negative effect on their mental health are six times more likely to say it affects their productivity. Moreover, financial distress has a direct impact on job satisfaction — financially stretched employees are twice as likely to look for a new job.
It’s possible that an employee’s financial issues are a result of an employer’s low salary or subpar health insurance benefits. More than half of Americans, for example, don’t believe they earn enough to be able to save for retirement. Low pay is a valid concern that warrants an employee’s negotiation for higher pay or their search for a job elsewhere.
However, assuming an employee is compensated fairly for their role, financial wellness programs are a way for employers to both provide valuable resources that help reduce employee turnover.
4 Steps to Implement a Financial Wellness Program
Financial wellness programs improve employee financial wellness and literacy through education, counseling, or money management platforms, but no one financial wellness program looks the same. Take these four steps to create a successful program for your employees.
1. Evaluate employees’ needs
Assess employee demographics and career stages to determine what employees will need most from a financial wellness program by administering anonymous surveys. Survey questions may include:
- How much credit card debt from previous billing cycles do you currently have?
- Do you budget your expenses?
- How much money (in dollars or as a percentage) are you able to save on a regular basis?
- What dollar amount or percentage of your pay do you put away for retirement?
Alternatively, perhaps a company’s current financial wellness tools are coming up short. The survey findings may reveal the ineffectiveness of current tools, especially if HR conducts a survey before and after launching a financial wellness resource. Survey results may point to potential gaps in current offerings and persistent, unaddressed employee needs.
2. Obtain leadership buy-in
If company leadership isn’t aware or convinced of employee financial wellness as an issue, present the survey findings from the first step and highlight the productivity and job satisfaction benefits that come with supporting employees’ financial well-being.
3. Get started immediately with free programs and resources
With a green light from the CEO, a company can offer resources that target a combination of the following areas:
- Roth vs traditional IRAs
- Student loan or credit card debt
Some financial institutions and nonprofits offer free resources, such as workshops, tools, and coaching, that companies can use to start addressing the goals and concerns of employees. Free financial wellness resources include:
- Enrich’s budgeting tool
- National Foundation for Credit Counseling’s debt management plan
- Alison’s financial literacy course
- SoFi’s credit card interest calculator
Additionally, several HR software solutions include financial wellness features that can help streamline this program with other employee benefits. The right constellation of offerings will depend on the needs and life stages of a company’s workforce.
4. Establish metrics for success
After building a program, it’s important to establish metrics for success. A success metric may be the percentage of employees participating in retirement programs or investing in health savings accounts.
Measuring employee stress can be a more difficult metric to capture without prying into employees’ personal financial decisions. Optional surveys are a viable solution to check in with employees periodically to see if they are experiencing financial stress without being intrusive.
HR Software Solutions That Include Financial Wellness Features
Some HR software includes financial wellness features and programs, so there’s no need to invest in a separate, standalone tool.
Moreover, sometimes employees aren’t aware of the range of benefits available to them. Having an integrated employee financial wellness solution increases its visibility to employees when they log into their self-service portal.
Employee wellness benefits that are built into HR software solutions also mean that HR teams can more easily monitor and analyze how employees use these benefits.
Gusto is an online HR software that offers financial wellness features as part of its plans. With 401(k) retirement plans, 529 college savings, and automatic savings plans, companies can help their employees reach long-term financial goals and achieve peace of mind.
More than half of Americans (56%) don’t have enough in their bank accounts to cover an unexpected $1000 expense. To address this, Gusto also offers the Gusto Wallet app, which allows employees to borrow against their paychecks at no extra cost to them or the employer in case of surprise expenses.
LearnLux is a learning management system focused on financial literacy and well-being. It provides lessons and tools to help employees gain a better understanding of 401(k) plans, learn more about homeownership, and explore the effects of credit card debt, as well as many other topics.
HR teams can also use the tool’s dashboard to see how employees are engaging with the software. This helps get a sense of LearnLux’s effectiveness in addressing employees’ particular financial wellness needs.
Gradifi is a standalone financial wellness tool that helps employees pay down debt and work towards their future goals.
One interesting aspect of Gradifi is the option to offer student loan repayment as a benefit. With Gradifi’s Student Loan Paydown option, an employer directly contributes a set amount toward an employee’s student loan servicer. With the average student loan debt in America at $40,339 per person, offering help with student loan repayment could significantly ease employee financial stress.
Enrich offers financial wellness resources and services to support employers who want to provide financial literacy and measure the efficacy of their financial wellness programs.
The platform can be customized to measure company-specific goals, such as increasing 401(k) participation or decreasing employee stress. It provides robust reporting tools so that HR can measure ROI for a company’s financial wellness program. A clearer picture of a financial wellness program’s ROI informs decisions about whether to add or reduce financial wellness program offerings.
Choosing Software to Kickstart Your Employee Financial Wellness Program
Employee financial wellness is an important part of a holistic approach to employee health. Employers who offer financial wellness programs help reduce employee stress and demonstrate that the company is invested in their health and well-being. In turn, employees who are financially secure are more satisfied at work, more productive, and healthier.
Explore our HR Software Guide to find the best solution for your organization that includes financial wellness.
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