How Comprehensive Financial Wellness Programs Prepare Employees For Uncertain Times

A recent study¹ found that Americans felt financially unprepared to handle uncertain times, like those presented by the pandemic. The D.A. Davidson study found that few Americans graded themselves as having adequate financial knowledge:

• A Grade – 16%
• B Grade – 34%
• C Grade – 36%
• D Grade – 10%
• F Grade – 4%

These numbers are dismal, but the truth is likely to be even worse since those who take surveys often inflate their abilities when self-reporting. Thankfully, there is a solution. 

Just over half of those surveyed suggested simply having financial literacy education would have made a difference. Based on this data, employers can help their workforce prepare for uncertain times by providing a financial wellness program.

Create a Financial Plan

The study found that 15% of respondents didn’t understand how to create a financial plan. But knowing how to create a budget and using one are two different things.

The Pennyhoarder² found that 55% of Americans do not use a budget. 

How can budgeting help employees in uncertain times? Those with a written budget:

• Stay on track with their financial goals – They are more likely to save money for retirement, emergencies, and education. They are also more likely to pay down debts. Pennyhoarder found that those without a written budget tend to have $5,000 or more in debt and half do not know what they spend their money on.
• Feel less stressed – One study³ found that having a budget lessens financial anxiety, which reduces physical stress symptoms like lack of sleep, tense muscles, and stomach issues.
• Are better prepared for emergencies – Bankrate⁴ found that 56% of Americans did not have enough savings to pay for an emergency. Having a budget can help employees set aside money each month for any unexpected emergencies.
• Save for retirement – The US Census Bureau⁵ found that almost half of adults between 55 and 66 had no retirement savings. Once again, budgeting can help employees save money each month.
• Recognize poor financial habits – Sticking to a budget can highlight spending patterns and help employees eliminate those that are not beneficial to their overall financial goals.

A financial wellness program can provide courses on budgeting that teach the basics, help employees assess their current situation, and create a budget based on their findings.

Enrich not only offers a budgeting course but also offers interactive budgeting tools as well as financial and money personality assessments.

Debt Management

Another area in which respondents felt underprepared was debt management. Sixteen percent of those surveyed did not understand how to handle their current debt. 

But is debt a problem for your workforce? According to the numbers, it is.

As of 2021, personal debt reached $14.96 trillion in the United States⁶, which averaged $58,604 per adult.

In fact, at least 77% of American households have debt⁷. This debt includes credit cards, mortgages, student loans, and auto debt.

Employees with excessive debt often experience:

• High levels of stress
• Poor credit rating
• Lack of retirement funds and emergency savings
• Inability to buy a home

A financial wellness program can help employees teach employees about debt management techniques that will allow them to reduce their debt burden.

Internal data from one Enrich user found that after using the program for one year, 28% more employees paid off their credit cards each month, credit scores increased by 25.51 points, and bank overdrafts decreased by 40.7%.

Insurance

One out of five people surveyed felt they didn’t know enough about insurance coverage.

Although 9 out of 10 Americans had health insurance during 2020⁸, many Americans do not know how their insurance plan works. Nor do they understand other types of insurance and when they are needed, such as life insurance, disability insurance, long-term care insurance, homeowners insurance, auto insurance, and more.

For example, Insurify found that 96% of Americans did not understand their auto insurance policies⁹, and Kiplinger found that two-thirds of Americans did not have adequate coverage on their homes¹⁰.

Your employees can learn about insurance and the questions they should ask by participating in an employer-sponsored financial wellness program.

The Enrich program offers two courses specific to insurance concerns including Understanding Health Insurance and Assessing Your Insurance Needs.

Investments

Finally, the financial subject participants knew least about was investments and investing with 48% not understanding the topic.

According to a GoBankingRates survey¹¹, forty-four percent of Americans avoid investing entirely because they do not understand the concept.

Unfortunately, employees who do not invest are unlikely to grow their wealth because money in a savings account is unlikely to grow very much.

Additionally, money in a savings account is not likely to outperform inflation, meaning that any money saved won’t have the same buying power when it is needed for expenses. 

Adding financial education on the topic of investing can help employees feel more comfortable with the process and can increase the likelihood of them saving in your company’s retirement plan.

The Enrich program offers courses called Investing to Build Wealth, Planning for Retirement, and How to Make the Most of Your Health Savings Account. It also provides the Investment Allocation tool and The Millionaire calculator to help employees understand investing.

Helping your employees become financially healthy and able to weather uncertain times is good for your employees and good for your business. Find out how Enrich can help.

1 - https://www.cnbc.com/2021/04/06/financial-education-would-have-helped-people-manage-money-during-covid.html 

2 - https://www.thepennyhoarder.com/budgeting/budgeting-statistics/ 

3 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3828373/ 

4 - https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-cover-a-1000-emergency-expense-with-savings.html

5 - https://www.census.gov/programs-surveys/sipp.html

6 - https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2021Q2.pdf

7 - https://www.federalreserve.gov/publications/files/scf20.pdf

8 - https://www.census.gov/library/publications/2021/demo/p60-274.html 

9 - https://www.businesswire.com/news/home/20220428005489/en/96-of-American-Drivers-Don’t-Understand-Their-Car-Insura

10 - https://www.kiplinger.com/article/insurance/t063-c032-s014-two-thirds-of-americans-have-inadequate-insurance.html

11 - https://www.gobankingrates.com/investing/americans-feel-they-dont-know-about-investing/