Financial concerns can weigh heavily on your employees, impacting productivity, and consequently, your bottom line. According to a poll of over 10,000 workers conducted by Salary Finance, 38% of surveyed employees are repeatedly unable to finish daily tasks due to financial worries. Individuals who are troubled by finances also take 1.1 sick days a year as a result of financial concerns and are 2.2 times more likely to look for a new job.
In total, the lack of employee financial wellness is costing American employers 11 to 14% of their total payroll expense, according to Salary Finance. As a result, many businesses are stepping up to help employees by providing financial education. These plans aim to educate employees on better financial management strategies while also teaching the benefits of healthy saving.
It’s easy to say that Americans should spend less and save more, but the simple truth is many don’t have the wherewithal to put money aside on a regular basis. According to FNBO’s ‘Savings Survey,’ 74% of Americans put 10% or less of their monthly paycheck towards savings, while 23% report they put in 0% in the bank. As a result, the Federal Reserve reports that a $400 emergency expense could easily bury 41% of households.
Where the younger generation is concerned, gaining the education necessary to embark on a career is a costly endeavor that extends well into their working years. In 2018, 69% of graduating college seniors were entering the workforce laden with an average student loan debt of $29,800. That equates to a monthly payment of $200 to $300.
To put this in perspective, the average starting salary for a college graduate in 2018 was $50,390, balancing out to a monthly income of just under $4,200 a month before taxes. By the time you subtract an average apartment rental payment of $1,216, a car payment, the cost of healthcare, as well as applicable state, local and federal taxes, young workers are finding it hard to make ends meet let alone save for a rainy day or retirement.
Even more troubling is the state of a number of older Americans. The Insured Retirement Institute (IRI) reveals that 42% of baby boomers have failed to save anything for their retirement.
It all adds up to a troubled workforce. A study conducted by Mass Mutual indicates that financially stressed employees lose 13 work hours a month due to distractions related to finances. This is costing American businesses as much as $3.3 million a year.
That may be why increasing employee financial literacy and wellness is a top priority for 89% of employers, according to MetLife. Across age groups, financial wellness programs have provided measurable benefits for employees, with 80% improving their financial wellness through the use of financial planning tools.
As it turns out, these programs also benefit employers. According to MetLife’s survey of 1,000 full-time employees, 60% of respondents say they are more inclined to remain with a company that offers such a benefit.
Every employee defines financial wellness differently. For 34% of individuals surveyed by PwC, wellness means not being stressed by financial matters. For an additional 18%, being debt free is the top priority, and 16% want to save enough to cover unexpected expenses.
To address the varying needs of your workforce, financial wellness plans need to meet the employee where they are on the road to financial success. Following a few simple guidelines can help your company develop a program that positively impacts the financial wellbeing of your workforce.
Think long term: When developing an employee wellness program, education needs to be consistent and planned well in advance. Consider having quarterly meetings on the topics most concerning to your employees and plan a long-term schedule.
Tailor your program: The needs of a younger worker carrying a heavy load of student debt is going to be different than those of an older employee nearing retirement. Tailor your plan to accommodate the different needs of your workforce. For example, consider sending targeted literature about retirement plans to different age groups with their 401k statements or plan a campaign to reach those who have not begun to save.
Pair employees with financial guides: Personal support from a financial planner can help employees find their road to financial success by offering individualized guidance and encouragement. According to PwC, one in four employees rank access to an unbiased counselor as their most desired financial wellness benefit.
Market your financial wellness offerings: If your employees don’t know and understand what your company offers in the way of financial wellness planning, they won’t be able to realize the benefits. Educating employees on the value of your plan is as important as offering the plan itself.
Financial wellness plans, have been shown to improve employee financial health, with many participants moving from four to six on a 10-point financial-readiness scale and contributing 38% more to their retirement savings.[i]
If you’re ready to make an impact on your bottom line and in the lives of your employees, now may be the time to develop a financial wellness plan for your company.