3 Steps Employers Must Take to Create a Culture of Financial Wellness in the Workplace

According to Fortune¹, eight out of 10 Americans are worried about both their long-term and short-term financial situation. The Mind Over Money Survey² found that employee worry is centered on the following four concerns:

• Ability to pay monthly expenses
• Having enough money to retire
• Keeping up with the cost of living
• Managing debt

Financial stress has been linked to poor financial practices including impulsive spending, lack of financial planning, and neglecting to save money. Additionally, employees show up to work feeling fatigued and unable to concentrate. 

In many cases, financially stressed employees feel that they have nowhere to turn. Finances are often considered a taboo subject, so rather than admit to having money problems and seeking help, they experience shame and suffer in silence. This leads to less-engaged, poorly performing employees.

However, employers can change that by creating a culture of financial wellness. Here are three steps employers can take to move the topic of finances from prohibited to encouraged.

1. Talk About Financial Matters – Even the Mistakes 

Your employees feel stressed about finances for a variety of reasons. However, one of the biggest is that they are not financially literate.

The National Financial Educators Council (NFEC)³ shared their most recent financial literacy data which shows that 41 percent of Americans failed the test, showing that they do not have the needed financial knowledge to adjust their financial decisions and behaviors. 

When employees do not understand financial topics, they make financial mistakes such as incurring large bank fees, taking out high-interest payday loans, using high-interest credit cards, and making poor investment choices.

These mistakes often lead to embarrassment, and this embarrassment keeps your employees from seeking out useful information that can help them from repeating these mistakes. 

Employers can help by creating an open atmosphere around money talk. The best way to create this kind of atmosphere is to encourage mid and senior-level managers to discuss their personal financial problems and mistakes. When management discusses these topics, employees can:

• See that they are not alone
• Realize that they do not need to be embarrassed about making financial errors
• Understand that they can rise above their mistakes
• Learn how to reverse their mistakes and how to avoid making others

When managers are willing to share their financial woes, past and present, employees feel empowered. 

2. Offer Financial Resources for Emergency Situations

Financial emergencies happen, even to those that are prepared. In order to create a culture of financial wellness, your company should consider offering resources for employees who find themselves in this situation.

Here are a few ideas to consider:

• Emergency grants 
• Interest-free emergency loans
• No-cost access to a financial counselor
• Paycheck advances

In addition to offering emergency benefits, companies should also consider adding benefits that help employees prepare in advance for emergencies. These might include such things as pet insurance, emergency savings accounts, health savings accounts, student loan assistance, and death or bereavement benefits. 

3. Provide a Financial Wellness Benefit to All Employees

Finally, employers can provide financial wellness as part of the benefits package to all employees.

Financial wellness programs provide the needed information and tools to make better financial decisions and create strong financial habits. This, in turn, reduces financial stress and increases financial well-being.

When employees have access to a holistic financial wellness program, they learn to:

• Manage their money by creating and following a budget, balancing accounts, learning smart ways to shop, and deciding the most advantageous time and way to spend money. 
• Reduce debt by paying down credit cards and loans, as well as how to refinance or consolidate student loans. One major Enrich user found that after using the program, 28 percent more employees began paying off their credit card debt each month.
• Prepare for emergencies by creating an emergency savings fund. 
• Invest wisely by understanding investment risks.
• Save for the future including education goals and retirement planning. The same Enrich user found that 15 percent more employees contributed to the employer-sponsored retirement plan and maximum retirement plan contributions increased by 10 percent.
• Avoid financial scams and identity theft.

By adding these components to the workplace, you can create a company culture that helps your employees achieve financial wellness. Even if you have to start small, the best thing to do is to start now. 

1 - https://fortune.com/2020/08/08/69-of-americans-think-the-way-they-work-has-changed-forever/?utm_source=facebook.com&utm_medium=social&utm_campaign=fortunemagazine&xid=soc_socialflow_facebook_FORTUNE

2 - https://www.capitalone.com/about/newsroom/mind-over-money-survey/

3 - https://www.financialeducatorscouncil.org/national-financial-literacy-test/