Many progressive companies today are considering creative ways to attract and retain good talent. The oldest Gen Zers are just barely out of college, but research says that they, in particular, are interested in learning more about financial well-being. Companies have long recognized that when employees — of every generation — are happy and healthy, they are more productive. That’s why employers offer perks like medical insurance and paid sick leave. But health can also apply to employees’ financial well-being — because workers don’t leave their money problems at home.
You may wonder whether a financial program is something you should consider as part of your compensation offering. Here, we provide a definition of financial well-being, the advantages of a financial benefits program, and what such a program might include.
What Is Financial Well-Being?
Financial well-being is the sense of security that comes from having enough money to meet your day-to-day needs, as well as a financial plan that allows you to recover from a temporary setback and make sound choices in the future. Financial well-being is not about bank account balances. Rather, it is about managing your money in a way that provides financial freedom.
Financial well-being goes beyond making it to the finish line each month without a plan. We either control our money or our money controls us. When we work every day, we want to feel that we can meet our financial obligations and live our lives without financial worry. That’s the feeling of financial well-being.
When employees are financially fit, they are better able to contribute in positive ways to the workplace culture, benefiting both the company and themselves.
Stress, Money and the Workplace
Deadlines. Competing priorities. Heavy workloads. But the number one workplace stressor does not come from internal pressures. It’s the money blues.
Financial stress of employees takes its toll on employers. According to John Hancock Retirement Plan research, the combined cost for loss of productivity and absenteeism resulting from a financial situation is $1,900 per person. For a company of 500 employees, that’s nearly $1 million a year. The groups most affected are millennials, Gen Z and those making less than $50,000 per year.
Millennials constitute the majority of the workforce today. Many are strapped with sky-high student loans and debilitating credit card debt. So far, Gen Z seems determined not to repeat the mistakes of the previous generation. They are users of credit cards, however, and, as mentioned, keenly interested in acquiring the tools of financial literacy.
During the pandemic stress has been particularly high. A recent survey of HR professionals and benefits brokers revealed that 81% of employees face money problems because a partner was out of work during the crisis. And more than one-third of employees have requested financial assistance from the company during this time period. Most troubling, employers report higher levels of stress, increased absenteeism and a greater number of health care claims.
It’s for these reasons that many employers are offering financial well-being tools.
Types of Financial Perks
Financial wellness programs are increasing in popularity. Many companies offer seminars on topics like investing, retirement planning, budgeting, debt reduction and more. Programs might also include financial counselors, student loan repayment assistance, tuition reimbursement, home financing, medical bill financing or early wage access, for example.
It’s good to provide solutions that can adjust to meet the needs of the majority. It’s also important to consider benefits that do more than provide a temporary fix, such as a payday advance. The best options help employees become more financially savvy in the long run. When employees no longer have to worry about financial matters on a daily basis, they are happier and more productive.
A Financial Well-Being Benefit That Matters
Most people can only afford the big-ticket items — a house, a car, college tuition — through credit. That means that credit is an important financial consideration for just about everyone. People wonder whether their personal financial situation will be good enough when the time comes to take the next big step. For many, the answer is no. The reason is they don’t have good control over their credit.
Good credit is important in our lives. And that means having the best credit score possible. It’s how we qualify for the best loan rates, obtain a credit card, get cell phone service, even find a new job. It can mean the difference between living paycheck to paycheck and having a comfortable margin that allows employees to save money and contribute to their retirement accounts.
For example, on a 30-year fixed mortgage, the borrower with a credit score of 760 pays $241 less than the borrower with a credit score of 630. On a $20,000 car loan, at a score of 720 which is only slightly above average, the borrower pays $126 less per month than the borrower with a score less than 589. Since this happens across a range of products and services, the total adds up.
Anyone can get a free credit report from each of the three major credit bureaus once a year. But that’s not enough for people who want control. Credit monitoring allows employees to stay on top of their financial situations, alerting them to any change in their accounts, and it also helps to prevent fraud. Credit monitoring must be 24/7 and in real-time, alerting the employee before any damage is done.
ScoreMaster® is the credit monitoring solution that offers even more. With ScoreMaster®, employees can optimize their use of credit, allowing them to apply for a loan or open a credit card at just the right time. It’s a cost-effective way to give your employees a giant leap toward financial literacy.
Financial wellness tools are an important part of any benefits package resulting in greater financial security, as well as a more motivated and productive workforce. ScoreMaster® empowers employees with a plan so that they can take the necessary actions to achieve their best possible score. Learn more today.
PR Newswire – Gen Z Wants More Financial Education
John Hancock – Financial Stress and Its Cost