Two-plus years of the pandemic and its continued impact on the economy are making workers more financially stressed than ever. According to a study by ADP, 60% of workers across all income brackets are at least somewhat stressed by their finances. This trend remains consistent across all income levels, with 44% of earners making at least $75,000 saying they are at least somewhat impacted by financial stress.
Another study by ADP reported that 75% of employees want to work for a company that cares about their financial wellbeing. Furthermore, our research shows 59% of millennials would give priority to a job offer with an employer that offers them early access to their wages for increased financial flexibility. Indeed, employees are seeking more from their employers to help them better manage their finances.
The rise of financial wellness as benefit
To address employees’ growing financial stress, more companies are providing financial education and helping employees improve their financial literacy: learning about money and how to manage it, with a particular focus on spending, budgeting and investing behaviors. It also helps people recognize the part their emotions play in managing money. Financial literacy teaches people how to make adjustments based on outcomes and plan appropriately for goals such as retirement, college funds or repayment of debt.
Learn about financial wellness strategies at the Health & Benefits Leadership Conference, May 3-5 in Las Vegas. Click here for more information.
At a very basic level, the management of money includes how we pay our bills while still saving money or adding to our retirement funds, how we use insurance to manage financial risk and how we plan for taxes. While this process is at the crux of financial wellness, unfortunately, it’s rarely taught in school. Some people learn these skills through their various life experiences, but so many more have never had a formal financial education.
Why should employers care about employee financial wellness?
With so much on employers’ plates, it’s fair to ask why employee financial wellness should be an employer’s responsibility. What’s the return on investment? Well, in a competitive job market, it can make all the difference when it comes to attracting and retaining your talent.
ADP Research Institute’s September 2022 Quarterly Research Insights into the Changing Landscape of Small Business revealed that offering benefits like flexible work hours/schedules and special bonuses/increased pay are most important to attract and retain employees in smaller companies (under 50 employees). Larger companies (50-499 employees) cite retirement plans as most important to attract employees, followed by special bonuses/increased pay.
See also: Why this accounting firm has rolled out 2 dozen benefits since COVID
As an employer, taking care of your employees improves your talent brand and your ability to attract good people. It’s also rewarding to know that you’re bettering the lives of your employees, helping them to make smarter financial decisions for themselves and their families.
What is a financial wellness ecosystem?
In order to help your employees better manage their money, you need to create an ecosystem that helps them manage their money better: from earnings to expenses to savings. For example:
- Providing digital banking options for un- or under-banked employees to make purchases, withdraw money from ATMs and pay others via person-to-person apps
- Offering earned wage access for employees to access portions of their earned wages before payday
- Making it simpler for employees to put aside money automatically, including retirement savings deductions
- Allowing workers to pay their bills by just taking a photo of the bill
- Helping them build their credit rating through secured credit cards and other tools
- Offering easily accessible digital financial literacy and educational tools
Employees need financial guidance now more than ever. Fortunately, we have the technology now to integrate HCM data with sophisticated digital financial tools. For everyone involved, this unique situation presents a teachable moment where employers—through a financial wellness ecosystem—can help their workers better manage their income and reduce stress.