“The number one problem in today’s generation and economy is the lack of financial literacy.” ~Alan Greenspan
Although the economy continues to show growth, statistics reveal that at least half of the work force is experiencing some level of financial stress. On the surface, that may not seem like your problem as an employer. But take a step back to look at the big picture and you’ll find that it isn’t just impacting your employees. Their financial wellness—or the lack of it—should matter to you.
A 2017 conducted by PwC concluded that 53% of employees are worried about their personal finances. That means they may miss work because of financial issues, cite health issues due to financial stress, and are more likely to be distracted by financial concerns while at work. In fact, nearly one in three employees admit that issues with personal finances have been a distraction at work. And 46% of those who are distracted say they spend three or more hours of working time each week thinking about or dealing with issues related to their personal finances.
That can put a big dent in your company’s bottom line.
Instituting Financial Wellness Programs
What can you do to help your employees feel more confident and secure about their finances?
First, ask them. They know better than anyone where the gaps lie and what their specific needs are. You might think it’s planning for retirement, but your Millennial employees may stay awake at night wondering how they’re going to pay off their student loan debt. That makes retirement planning a second-tier goal (even though it shouldn’t be).
This way, employees won’t feel self-conscious about answering honestly.
Once you’ve gotten a handle on what it is your employees are looking for in a financial wellness program, consult with a financial planning expert who can assess the data you’ve compiled, identify needs, and then make recommendations for financial education at your company.
Educating employees gives them the right tools that help them to develop action plans that address their immediate needs and build a more secure future. It can be as simple as a “lunch-n-learn” series or workshops that cover a variety of financial concepts from budgeting to understanding often complex retirement plans. Maybe you want to offer free credit monitoring to your employees. That, along with financial planning advice, gives them the incentive to improve their credit.
Nearly worry about future college expenses. Consider adding a 529 plan as part of your benefits package. A 529 plan is a tax-advantaged savings plan that gives parents the ability to save for upcoming college costs.
But what if savings simply didn’t cover the cost of college? We’ve already touched upon the stress of student loans. You might want to offer an option that puts aside a portion of each paycheck toward student loan repayment—it’s an increasingly popular benefit.
Automatically enroll new hires in retirement plans as part of the on boarding process. Doing so encourages your employees to be proactive about saving for retirement. It’s now the norm with 67% of 401(k) plans offering automatic enrollment.
Make it easy for your employees to opt in to a financial wellness program and to increase the amount withheld from their paychecks. The earlier an employee enrolls in a plan, the more likely it is that they will stay enrolled. Watching their retirement plans grow and having involvement in how it grows gives them more incentive to stay enrolled. That helps to alleviate some of that financial stress.
In a nutshell, your bottom line benefits when your employees’ bottom lines benefit. Win/win.