Financial Wellness Programs -- A Win-Win for Your Business and Your Employees

Money worries distract workers. Employees who are stressed out about their finances generally have trouble focusing on work and don't give it their best effort, resulting in a loss of productivity. Moreover, employees who are living from paycheck to paycheck are unlikely to direct money to a workplace retirement plan and, if they do contribute, they tend to contribute small sums. Financially stressed employees are also more likely to leave their jobs, taking their skills with them and putting pressure on their former employers to hire replacements.

Inflation, debt, a lack of emergency savings, and minimal or no retirement savings are some of the factors contributing to the high levels of financial stress among American workers that can affect the companies they work for. Very often, personal financial issues are compounded by a lack of knowledge of basic commonsense money management skills. One way employers can help employees gain more control over their financial lives is by providing them with access to educational programs focused on financial wellness.

What Is Financial Wellness?

When it comes to their finances, employees have different priorities and obligations. But in broad terms, employees who are financially well make sound financial decisions, manage their money wisely, and have a clear, workable plan for saving for their short- and long-term goals. Since they are no longer under extreme financial stress, they can also focus more on fully engaging at work and in other parts of their lives.

An effective financial wellness program should focus on imparting the knowledge and skills that help individuals overcome personal financial challenges. Employers should consider the following topics and strategies:

• Budgeting. Learning how to budget and set spending priorities is an invaluable skill that can help individuals get a handle on their financial lives. Employers could direct employees to online tools that help with budgeting and offer suggestions on how to not overspend.
• Debt management. Online seminars, videos, and written materials that explain the terms and conditions of consumer debt and how to comparison shop among credit card issuers can help prevent employees from making expensive errors and falling deeper into debt. There are also tools that allow users to develop a strategy for paying off credit cards and other debts that limit their ability to save for the future.
• Saving for current and future goals. Offering materials that teach employees how to establish and prioritize financial goals, such as building an emergency fund, buying a first home, financing a child's college education, and saving for retirement, can be hugely helpful in putting employees on the road to financial wellness.
• Investing education. Covering a variety of investment-related topics -- including asset allocation, diversification, risk and reward, volatility, and rebalancing -- can help retirement plan participants make sound decisions about managing their plan assets. Online tools, seminars, and handouts that explain these topics in easy-to-understand language give employees the skills they need to make the most of their opportunity to attain retirement security.

Your financial professional can offer helpful insights on smart ways to help your employees take control of their finances and improve their financial health.