Considerations for Implementing an Effective Financial Wellness Program
High inflation has contributed to employees’ financial stress, as many struggle to navigate higher prices, uneven wage growth and credit card debt. According to debt solution company BDO, 54% of Canadians live paycheque to paycheque. Employees who are stressed about their finances are more likely to be distracted, less engaged and less productive at work.
According to a survey by Manulife Global, four in five Canadians worry about their finances while at work. However, if financial programs were introduced by their employers, 79% would benefit from reduced financial stress, 75% would be more likely to stay and 66% would be more productive, Manulife found.
In today’s competitive business landscape, employers can use financial wellness programs to support their workforce and improve employee satisfaction, retention and productivity. Let’s look at the benefits of financial wellness programs and how to implement successful programs.
The Impact of Financial Stress
Worrying about finances can negatively impact employees personally and professionally. Individuals with financial stress are twice as likely to report poor overall health, according to the Government of Canada. Additionally, financial stress can affect:
- Sleep
- Mental health
- Self-esteem
- Relationships at home
Professionally, financially stressed employees are less likely to be engaged at work, feel a sense of belonging or recommend their employer to friends or family. As a result, organizations may experience increased turnover, reduced productivity and weakened company culture.
Understanding Financial Wellness Programs
Employers can offer financial wellness programs to help employees manage personal financial matters. These programs are designed to educate employees and help them reduce financial burdens.
Financial wellness programs may include several resources, such as online education, budgeting tools, credit resources and financial coaching or counselling. Examples of common financial topics include the following:
- Retirement planning
- Investments
- Debt management
- Household budgeting
- Credit management
- Savings
- Taxes
Financial wellness programs often go hand-in-hand with organizational initiatives that promote employee well-being, encouraging healthy behaviours that can contribute to positive mental and physical health.
Benefits of Financial Wellness Programs
Employers who address employee wellness issues, such as financial stress, may experience happier, healthier and more productive employees. Financial wellness programs can benefit employers in the following ways:
- Decrease employee stress—Financial wellness programs provide employees with the tools and knowledge to manage their finances effectively. This can reduce employee stress, improve productivity and boost morale.
- Reduce absenteeism—Financially stressed employees are more likely to take unplanned days off, which disrupts team dynamics and harms productivity. Financial wellness programs can help employees manage their personal finances, resulting in fewer missed days of work.
- Increase productivity—Struggling employees may spend time dealing with or thinking about their personal finances at work. Financial wellness programs help employees regain control of their finances, creating a more focused and productive work environment.
- Improve attraction and retention—Financial wellness programs are an attractive benefit that can improve employee attraction in a competitive hiring market.
Implementing Financial Wellness Programs
Traditionally, employers have offered financial support through retirement plans, life insurance and other financial and insurance benefits. However, retirement and financial benefits are just one aspect of a successful financial wellness program. To remain competitive, employers may consider providing a more comprehensive financial wellness program that gives employees the tools, knowledge and resources they need to get a handle on their spending and plan for future savings. These programs may include the following aspects or components:
- Financial education, including how to budget and avoid debt
- Loan consolidation opportunities
- Tools for budgeting and tracking spending
- Mortgage assistance and home-buying advice
- Access to financial experts who can advise on investing, saving and retirement planning
- Emergency savings funds and loans
- Partnerships with financial planning organizations
- Tuition reimbursement programs
- Regular financial workshops
- Comprehensive retirement planning with employer-matching
- Opportunities to buy group life insurance and other elective insurance
Employers can weigh the advantages of providing digital financial resources against the benefits of human counsellors or advisors. Digital resources can give the employees anonymous, round-the-clock access to financial education and management tools. However, humans may be more valuable to help employees understand complex financial issues and to keep employees engaged and motivated over the long term.
Financial wellness programs can benefit both employees and employers. These programs can provide employees with the resources they need to successfully navigate difficult financial times, manage and avoid debt and plan for retirement.
Employers that successfully implement these programs may experience improved attraction, engagement, productivity and retention, which can contribute to revenue.
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