We already know that employees place a high importance on their workplace benefits. In fact, more than 40% of employees said that they were more likely to stay at their current organization if their employer provided mental health benefits, and Chipotle saw a 3.5 increase in their retention rate for employees who took advantage of their education program.
The same is true financial education and financial wellbeing. In a joint study with Stanley Morgan, SHRM conducted interviews of thousands of workers who left or lost employment in 2021. They found that nearly 74% of respondents said their employer did not add new benefits or expand existing benefits to support employee mitigate stress during the pandemic. 2021 also saw record-high employee churn rates as Americans quit their jobs at greater rates than at any point in the last 20 years.
Especially with the uncertainty of the pandemic and economy, more Americans are looking to gain financial security for now and into the future. This presents employers with an opportunity to offer financial education and financial wellbeing benefits and create a vibrant and healthy workplace culture.
What is financial education and wellbeing?
There’s a lot that goes into the subject of financial education and financial wellbeing. To look more closely at its various parts, we’ve broken financial education down into the three terms: financial literacy, financial capability, and financial wellbeing.
- Financial literacy refers to having the knowledge and being able to use that knowledge to manage finances and plan your financial needs for the present and future
- Financial capability takes into account an individual’s level of access to finances, investment opportunities, financial institutions, and markets. This is really about an individual's ability, or lack thereof, to engage in financial pursuits
- Financial wellbeing is all about having the financial security and freedom, through financial literacy and capability, to plan your finances for the present and future. Financial wellbeing looks at your ability to meet your day-to-day needs, future financial plans and goals, and to have the financial freedom to enjoy your life and not stress about finances
What makes a financial wellbeing program
Employees carry a lot of stress around their finances. In fact, this APA report showed that among all generations from Baby Boomers to millennials, money was the leading cause of stress.
Financial wellbeing programs help to alleviate financial stress by taking a holistic approach and taking into account the various facets of finance and how it affects our lives. Wellbeing programs will provide financial literacy in order to increase financial capability, which allows individuals to plan, manage, and take control of their financial life. Financial wellbeing is all about empowering individuals to take control of their finances and reach their goals.
Aspects of financial wellbeing programs include:
- Personal and household budgeting
- Consumer credit building
- Consumer debt reduction
- Student loan repayment management
- Emergency and short-term savings
- Spending behaviors and consumer attitudes
- Financial goal setting
- Financial crisis management (dealing with collections, extended unemployment and even certificates required for filing bankruptcy)
- Financial resilience
- Spending habits
- Building financial goals with your partner and families
With the financial knowledge, guidance, and resources available to your employees, they will have the peace of mind and confidence to take control of their finances, relieving them of a huge source of stress and strain.
Benefits of a financial wellbeing program
The great thing about a financial wellbeing program is that it takes a multifaceted approach to financial wellbeing, allowing your employees to focus on the financial subjects that matter to them. A lot of these programs come with financial wellbeing coaching, planning and tracking features, educational and guidance videos, online resources, and more.
Benefits of a financial wellbeing program include:
- A financial resource employees can access anywhere, anytime
- Digital features that help them plan and stay on track of their goals
- Expert financial guidance that employees can rely on when they have questions or concerns
- The ability to customize their goals and curate classes/schedules to meet their unique needs
- Financial wellbeing programs are multifaceted and have something for everyone, which makes it easier to implement into segmentation practices
- Employees will be able to manage their finances and, subsequently, their stress surrounding financial-related issues
- The knowledge, tools, and tricks to stay on top of their financial goals
- Increase in employee customer satisfaction and work-life balance, which will translate into increased employee engagement, productivity, and retention
- The commitment and loyalty to your organization, which has shown that it cares about its employees by providing robust benefits programs