Before discussing the need of financial wellness programs in the workplace, it is crucial to understand what financial wellness is. Many employees, especially at the start of their career, tend to struggle to curtail their expenses, and end up trapped in what is called paycheck-to-paycheck living. The result? Scenarios where the employee’s monthly outflow of cash is almost as much as the monthly inflow, leaving little room for savings or emergency funds. Financial wellness implies a situation where an employee is living well within his or her means and is able to keep an emergency fund to allow for stressful situations by taking little or no debt. It’s financial independence, in short.
With increasing general awareness about different investment products and management of personal finances, it has become somewhat easier for individuals to achieve their long term financial goals. Most individuals today understand the need to start saving early, thereby reducing the number of money related stressful situations in the future.
But in today’s era, financial wellness is not just a concern for employees but also for their employers. Why?
- When employees are experiencing financial hardships, they’re very likely to bring that stress into the workplace, and come into office worried and unable to concentrate.
- Even when they’re working the stress shows up in their work and their health, driving down productivity and increasing health costs – reason enough for employers to consider offering advice in this area.
- Organisations with the foresight to acknowledge this issue are proactively introducing their employees to financial wellness programs and money management tools as a part of their work culture.
- Being invested in an employee’s financial wellness also ensures that the employee remains loyal and is hitched with you for the long term thus, reducing employee turnover.
The Society for Human Resource Management’s (SHRM’s) Employee Benefits Survey conducted earlier this year has revealed more organisations to be offering financial advice and financial wellness programs as compared to five years ago.
- Additionally, gone are the days when simplistic retirement benefits and insurance covers were adequate to attract and retain talent. For today’s generation, it is comprehensive compensation and benefits plans which include holistic financial wellness programs that are closing the gap.
- Check out the 2018 Employee Financial Wellness Survey by PricewaterhouseCoopers (PwC) for more insight into the why’s and what’s on financial wellness for employees.
It is crucial, however, for organisations to be cautious of becoming over-invested and to not make the mistake of pre-selecting financial products or services for employees. Every employee and type of workforce can have different needs, both for themselves and their families. Employees could be on different places on the spectrum of financial wellness. It’s important to offer them options and not a sales pitch, allowing them to exercise discretion and autonomy to the extent possible.