5 Keys to a Successful Financial Wellness Program

Money worries negatively impact employee productivity, health, and well-being in the workplace. And, according to Bank of America's 2018 Workplace Benefits Report, nearly 2 in 5 employees feel less than financially well.

Because of this, employers of all sizes are prioritizing the rollout of new or expanded financial wellness programs. In Lumity's 2019 State of Financial Wellness Benefits benchmark survey, 84% of employers said financial wellness benefits are important to their business. Their goal is to help employees achieve their short- and long-term financial goals:

  • Calculate income vs. expenses
  • Pay off student loans
  • Reduce credit card debt
  • Set aside emergency funds
  • Save for retirement

While the Bank of America report highlights that 91% of financial wellness program participants attest to their effectiveness, Lumity's benchmark survey revealed that only 1 out of 5 companies are following best practices. There's an opportunity to deliver a win-win: reduce the negative effects of employee financial stress and increase productivity for the company.

Defining Financial Wellness

What does financial wellness actually mean for these employees? According to the PwC 2018 Employee Financial Wellness Survey, the term falls under three definitions:

  1. Not being stressed about their finances
  2. Being debt free
  3. Having enough savings to cover unexpected expenses

In terms of everyday concerns, the same PwC survey reports that millennials, Gen X-ers, and baby boomers alike are concerned with not having enough emergency savings, not being able to retire when they want to, and lack of ability to meet monthly expenses.

Financial insecurity erodes employee productivity at work.

PwC found that in the last five years, 53% of workers reported feeling stress when dealing with their personal financial situation. Nearly half of the employees said that financial setbacks gave them the most stress. Those who are feeling this stress end up missing work or allow the worry to impact their productivity. Half of those surveyed said they spent three or more hours weekly to deal with personal financial issues.

Employers need to implement effective financial wellness programs that take care of these pressing concerns. Otherwise, both parties end up losing in the long-term.

5 Keys to a Successful Financial Wellness Program

Keep these keys in mind when creating your company’s financial wellness program. Each aspect increases your employees' ability to solve their financial problems, which reduces stress-induced/aggravated health problems (such as anxiety, depression, diabetes complications, and high blood pressure).

1. Take a holistic approach

Your program can’t be a one time, big time offer. It needs to be a sustainable, ongoing effort that retains an employee’s awareness and appreciation about their benefits. Apart from important financial issues such as paying down credit card debt and establishing retirement savings, the program must also help employees understand how health issues and healthcare costs impact their financial wellness.

According to the Bank of America's 2018 Workplace Benefits Report:

Healthcare costs are a huge blind spot for employees when it comes to financial wellness.

So, make sure to educate employees on all your company's benefits that contribute to financial wellness. For example, in Lumity's 2018 HSA Survey, 51% of employers reported "lack of employee understanding" as the top barrier to Health Savings Account (HSA) adoption. It can be helpful to frame an HSA like a "medical 401(k)" you can dip into now to pay for qualified medical expenses—or, let it build to complement retirement savings.

2. Prioritize Credit Card Debt

PwC found that while there are fewer employees carrying credit card balances, a significant percentage find it hard to meet their minimum payments. These debts are bound to rise, with interest rates averaging at 17.15 percent. Financial wellness programs need to focus on cutting down this balance. Otherwise, leaving it unattended will force employees to miss work.

Employee debt needs to be reduced over time in order to meet the other financial goals on the table. Have the program teach employees to budget according to their cash flow, while saving enough to meet the necessary payment amounts. Effective programs are able to connect employees to credit counselors and repayment programs.

3. Get Them to Save Early for Retirement

Not everyone has enough money to immediately contribute to their 401(k). However, anyone can start small and increase their contributions over a given period. Discuss the different retirement saving options for employees based on their different financial issues and how much they can spare for this fund.

It helps to have a plan provider on board to discuss specifics about improving their balance as they increase contributions over time.

4. Gather the Necessary Data for Your Program

Look at the data that can inform your program’s effectiveness and what it needs to offer specific to your employee population. For example, HR should be aware of the specific populations requesting overtime. These individuals are likely seeking additional income to address their debts.

Ask your health insurance broker and benefits providers for data about your group. They can give the numbers on how many (or how little) of your staff are contributing to benefits that will help them financially and holistically.

5. Monitor and Encourage Engagement in Your Program

The only way to measure a program’s success is to find out the engagement of its participants. Look at concrete indicators such as the number of employees who sign up, how many complete the sessions, and the goals participants make in the program.

You also need to measure and monitor if the employees improved their financial habits. This means taking a closer look at the participants’ financial health in terms of retirement contributions, health savings accounts maximized, and other benefits related indicators. See if there has been a significant increased in savings and if more participants are investing in these accounts.

Don’t just look at the positive indicators. Your program’s ineffectiveness can be measured in increased 401(k) activity such as withdrawals, outstanding loans, and loan defaults. These factors give you a better picture of the financial habits that affect an employee’s long-term financial health. It also shows whether or not the program taught the proper techniques or simply reverted the employee to old debt-incurring habits.

Tie the Program to Your Business Success

An effective and engaging financial wellness program can deliver a powerful ROI—for employers and employees. When your employees are able to manage their budget, reduce their overall debt, and build retirement savings, your business gains a more productive workforce.

For more insight into how your benefits package ranks against comparable companies, fill out a 2-min survey and our benchmarks expert will walk you through the results.


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