Being “financially well” means that you are able to manage day-to-day expenses, save for long-term goals, and feel financially comfortable along the way. When you and your employees put financial wellness at the fore, everyone is better able to manage their economic well being and be present on the job.
What Financial Wellness Is Not
It is a misconception that income and financial wellness exhibit a linear relationship. A household could be bringing in a million dollars each year, but if the family is still feeling constrained by their expenses, they are not financially well. While higher income does contribute to financial wellness up to a point, it should not be used as the benchmark of a healthy financial life. You can be financially well without being wealthy.
What Financial Wellness Is
Those who are financially well spend within or below their means, which allows them to be financially prepared to handle unexpected opportunities and emergencies. The core of financial wellness is security; those who are financially healthy have plans for the future and they are confident that they can achieve their goals without feeling extreme financial stress in the present. This security allows them to enjoy life in the present.
What Goes Into Financial Wellbeing
Much like physical health, financial wellness exists on a continuum and many factors contribute to it. A few examples of things that go into financial wellness include being able to:
- Know what your financial situation is
- Pay for basic necessities like food, rent/mortgage, and personal items
- Pay for healthcare expenses
- Absorb unexpected expenses with an emergency fund
- Feel secure in your employment
- Save for retirement
- Feel free to live in the present without constant financial stress
Why Financial Wellness Should Matter to Employers
For years, article after article has detailed the ill effects of financial stress on worker productivity. PricewaterhouseCoopers’ annual Financial Wellness Survey found that financial worries are the top cause of employee stress and that 32% of employees have been distracted by their financial situation at work. This percentage jumps to 50% for those employees who provide financial support to their parents or in-laws. Additionally, 49% of employees who are distracted by finances have spent three or more work hours each week thinking about or handling personal finance issues.
PricewaterhouseCoopers’ survey also notes that financially stressed employees are “more likely to leave for another employer that cares more about their financial well-being” (PwC pg 20). This higher employee turnover leads to increased training and hiring costs, as well as potential losses in productivity as remaining workers struggle to load balance.
On the opposite side of the spectrum, employers that invest in their employees’ financial wellbeing see benefits in the form of increased productivity, better employee engagement, better retention rates, and enhanced recruitment capabilities.
How to Assist Employees with Financial Wellbeing
Although providing employees with robust options to improve their financial wellbeing is excellent, they need to understand how to manage their own personal finances so that they can better comprehend the options that are being offered. A 2019 study by TIAA notes that there is a high correlation between financial literacy and financial wellbeing; education needs to come before decision making. Thus, it is useful for employers to offer personalized assistance and education plans for their employees to help them navigate their unique financial situations.
Other ways that employers can assist employees with financial wellbeing include offering 401K options and detailing what the options for those are, providing workshops for budgeting, and explaining benefits packages more thoroughly.
Morris Financial Concepts and Corporate Financial Wellness
The financial experts at Morris Financial Concepts recognize the importance of financial wellbeing in both personal and company life, which is why we offer services to improve employees’ financial health. We can assist your company with 401K planning, financial wellness programs, and individualized financial assistance for employees. To learn more about all of these options, view the Morris Financial Concepts 401K Planning page or contact a financial advisor today.