Employee wellness programs have proven quite popular for several years — but what about financial wellness?
In a study conducted by the Society of Human Resources Management (SHRM), 83 percent of HR professionals reported that personal financial challenges had some degree of impact on overall employee performance. PricewaterhouseCoopers found that almost half of employees who are worried about their financial health are less productive at work, and spend at least three hours each week dealing with personal financial issues.
While many employees may feel that their finances are a private matter not to be shared with the boss, providing help with financial wellness or financial literacy programs leads to employees who are happier, less stressed and more productive. Such programs have also been linked to lower healthcare costs, absenteeism and turnover.
Aside from these larger benefits, financially literate employees also have a much better understanding of their total compensation and benefits. They understand the value of their non-salary compensation, including 401(k) plans, health and disability benefits, tuition reimbursement, and profit-sharing plans. They are also more likely to participate in these programs.
Financial literacy can also carry through to employees’ everyday jobs, in terms of increased business acumen, especially in evaluating projects, resources and ROI.
With all of these potential benefits, how can a company help its employees be more financially healthy?
Start With Your 401(k)
One way to initiate a financial literacy program is to regularly discuss your company’s 401(k) or other retirement plans. While most employees are well aware of their compensation in terms of salary, they may be less aware of their retirement contributions. Hosting both in-person and online discussions for employees about your 401(k) can lead to larger discussions about preparation and planning for retirement.
Lean on Your Benefits Provider
Companies that supply benefits to your organization can be a great resource for initiating a financial wellness program. MassMutual, for example, conducts free, on-site financial workshops called PlanSmart (a MetLife program) for its clients’ employees. Better yet, incorporating these programs into your existing offerings might not even cost anything additional.
Incorporate Credit Simulations
One of the biggest indicators of financial literacy is the ability to manage credit. Consider providing your employees with access to a research and education tool, such as ScoreMaster, that provides simulations of credit scores based on hypothetical payments and spending decisions. More insightful than a static credit report, such a tool can help employees understand the dynamics of credit and the impact of large purchasing decisions.
Some companies are well-invested in such programs. According to Monster.com, publishing and communications company Cox Enterprises provides employees with free access to one-on-one phone consultations with money coaches. These private conversations cover topics such as debt counseling, retirement planning, budgeting, and student loans. A “Know Your Numbers” initiative provides a personal retirement readiness statement to eligible Cox employees to help them stay on track with saving for retirement.
Clearly, improving financial literacy for employees can be a significant benefit for both employees and employers alike. Workers who are better at managing their finances are less likely to end up stressing over finances, requesting salary advances or making hardship withdrawals from company 401(k)s. Implementing a financial wellness program is an investment in employees, with an easy setup and a lasting value.
Contact ScoreMaster today to learn how to empower your employees by teaching them financial literacy and helping them achieve their best possible credit score.
*Legal Disclaimer – ScoreMaster is a patent-pending educational feature simulating credit utilization’s effect on credit scores via payments or spending. Your results may vary and are not guaranteed.