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Financial wellness benefits have been a growing topic of interest among employers, but before you introduce this offering to your organization, it’s important to identify why you want to make this investment in the first place.
One reason to consider is the impact that a financial wellness program can have on the health of your employees. You might be wondering, “Wait, what? What do my employees’ finances have anything to do with their health?” It’s a fair question, and that’s exactly what I’m going to address in this article.
Yes, it’s true. Financial wellness benefits can have a significant impact on the health of your employees—specifically in these three areas:
I know this one seems obvious, right? But bear with me. There are a lot of misconceptions about the role and impact of financial wellness benefits, and I want to take the time to explain how they can improve financial health—and why they’re better than other financially-focused benefits.
When someone has poor financial health, they can’t manage, take action, or prepare for their current and future financial needs. This can lead to insecurity, anxiety, and stress about their financial situation.
Unfortunately, the more stressed someone is about their finances, the less likely they are to make smart decisions when it comes to spending and saving. In other words, breaking the cycle of poor financial health is extremely challenging.
That’s where you come in. I’m guessing you already offer several financially-focused benefits to your employees. So why bother with a financial wellness program specifically?
Yes, a 401(k) is a fantastic benefit, but that only helps with an employee’s long-term savings, which isn’t helpful for the 42% of employees who say it’s likely they’ll need to use money in a retirement account for expenses other than retirement. Financial education is also a great offering. But it doesn’t connect the dots between knowledge and action.
That’s why a comprehensive, holistic financial wellness program is so powerful when it comes to improving financial health. It gives your employees the tools, resources, and knowledge they need, but it also shows them how to take steps toward their specific goals—usually with some form of personalized guidance, such as one-on-one sessions with a financial professional.
Your workers recognize the difference too, which is why 53% of employees said they would feel less stressed about their overall financial situation if they had financial wellness benefits.
When asked what causes them the most stress, employees cite financial matters more than any other life stressors combined. Yes, more than a job or a relationship, money is the number one factor when it comes to the stress your employees are feeling. This ultimately takes a huge toll on the physical health of your workforce. Research found that financial stress can cause ailments like:
• High blood pressure.
• Respiratory symptoms.
• Somatic issues.
• High rates of tension.
• Sleep-related issues (insomnia, fatigue, night terrors, etc.).
When your employees’ physical health suffers in this way, your business suffers too. First, the side effects of financial stress lead to lower productivity and higher absenteeism, costing employers an estimated $250 billion per year. You’re also likely to see increased healthcare costs due to the physical side effects of poor financial health.
But there’s good news: financial wellness programs are proven to reduce these costs.
A Fortune 100 company introduced a financial wellness program to its workforce and discovered that the average employer healthcare costs associated with employees who used the benefit decreased by 4.5%. On the other hand, the costs associated with employees who never used the program increased by 19.4%. This led to cost savings of $271.50 per employee.
It’s not difficult to imagine how financial stress impacts the mental health of your employees. Having to think about their growing pile of debt and how they’re going to pay for next month’s rent creates a ton of stress and anxiety for most people.
Given this, it’s not surprising to hear that 40% of people say managing their money on a daily basis limits the extent to which they can enjoy their day-to-day life, and 65% feel like their financial difficulties are piling up so much they can’t overcome them. But if you dig a bit deeper, the picture is even grimmer.
Research shows that people in debt have higher rates of mental health issues like depression and anxiety than those who are debt-free. Financial stress is also the second most common cause of suicide after depression.
And it’s not just that financial stress causes mental health issues—often, it can exacerbate existing issues. 86% of people with mental health problems said that their financial situation worsened their mental health problems.
But financial wellness programs can help. A study found that 59% of employees using a financial wellness program reported good mental health, whereas the rate fell to 55% for those who weren’t. Without helping your employees change their financial situations, these related mental health problems aren’t going to go away on their own.
Financial wellness offerings are about more than finances. The proper benefit can help your employees feel more secure in their current and future situations. It can (literally) help them sleep better at night, experience reduced stress, and go to the doctor less. It can also allow them to actually enjoy their lives rather than being weighed down by the burden of their debt.
In other words, when you invest in a financial wellness benefit, you’re investing in the overall health of your workforce. So if you’re on the fence about whether or not you should hop on the financial wellness train this year, ask yourself where your employees’ health falls on your list of priorities. If it’s high, you know which benefit to offer in 2022.
‘This too shall pass away’ this famous Persian adage seems to be defeating us again and again in the case of COVID-19. Despite every effort