Finance

Why financial wellness is more important now than ever before and how can companies achieve it

Even before the outbreak of Coronavirus, money was found to be the major reason for stress in our lives, beyond employment, relationships, and personal health, according to research conducted all over the world.

Now, Covid-19 has upset the lives of employees with its massive layoffs and overnight shift to remote work. Despite this, it has compelled employees to reconsider how they approach their finances. This positive shift in the mindset has created a unique opportunity for employers to step up and assist the financial wellness of their staff.

Now, let us understand more about financial wellness.

What is financial wellness?

Financial wellness refers to the overall financial health of a person and also the absence of stress related to money. It can also be defined as effectively managing one’s financial life by considering both short-term and long-term goals.

Financial wellness improves the quality of life both physically and mentally. Financial well-being is not a target to be achieved but rather an endless journey.

You know your finances are in order when:

  • You have complete control over your daily spending
  • You have created an emergency fund
  • You keep track of your expenses
  • You do not need credit to meet your basic needs because you are debt-free.
  • Your savings and retirement objectives are within your reach

The most successful organisations are now turning their attention to employee well-being as a way to gain, emotional, financial advantage”

Now, coming to why companies need to focus on the financial wellness of their employees, here are some reasons.

  1. Your employees are expecting it

Financial wellness has become more sought-after than ever before. A recent survey revealed that over 60% of respondents believe that the pandemic has made it even more important for companies to provide financial wellness benefits. 53% of them said that they would feel less anxious about their overall financial situation if their employers had taken up more financial wellness initiatives.

  1. It takes care of employees today and tomorrow

When selecting the plans it is important to choose those which will benefit the employees both in the present as well as in the future. For example, you may offer the best retirement plan which is remarkable for long-term financial goals. However, if your employees are struggling to meet their day-to-day expenses, providing them with a wonderful retirement plan wouldn’t be of great help. 

But, this turns out to be the typical problem that the employees are facing these days. 42% of the employees say that using funds from retirement accounts for expenses other than retirement is likely. This shows that your employees require a comprehensive financial wellness benefit immediately to assist them with day-to-day money management as well as retirement.

  1. It reduces employee attrition as well as increases employee productivity 

Post covid, employee retention has become a significant challenge for organisations. Organisations can deal with this problem by implementing financial wellness programs. When there is financial well-being, employees worry less about money. And they are in a position to focus more on work and spend less time on non-official matters. Thus, it will lower the attrition rates.

Though it is often believed that employee financial wellness perks will only help them become better at money management, they will also benefit the company through  increased productivity.

Alternatively, stressing more about finance will negatively impact employees’ health. It was found in a survey that 50% of workers are worried about money at work. This reduces employee productivity and increases the rate of absenteeism. Thus, employers will end up paying the price for this. Knowing this, it’s necessary to understand how the right benefit can reduce the negative impacts of financial stress on the mind and body, improve focus, and save your company a considerable amount of money.

It is also important to note the consequences that you as an employer may have to face if you fail to provide the support that your employees need. That is when you increase the chance of employees leaving you. They look forward to working for companies that would be willing to invest in their financial wellness. 50% of respondents in a survey said they would be more committed to working for an employer for a longer period, who would offer financial wellness benefits.

Now that we have understood why financial wellness is important, let us try to know how financial wellness programs can be implemented.

  1. By providing financial assistance:

It’s time to start providing financial wellness benefits if you don’t already. You don’t have to make an enormous investment for that. You can do it at zero cost by providing additional credit facilities.

  1. By providing personalised financial advice

Now that employees get a regular salary, have a retirement account, and other financial assistance like virtual credit cards, show them how to use these resources to achieve their financial objectives. You could also connect them with financial experts.

  1. By providing financial education

Most companies do provide retirement benefits, but it is also important to help people to reach their short-term goals. If an employee is struggling to meet his daily expenditure, he doesn’t feel the urgency to plan for the long-term goals. You may hold seminars on financial literacy or invite experts to speak on subjects like budgeting, debt repayment, etc. 

Also, encourage your workforce to implement the knowledge they learn through your financial wellness programme in their daily lives.

Another benefit could be having an option of flexible paydays if it is feasible.

As we already saw some potential advantages and benefits that could result from financial wellness, now is the time to take action. These wellness programs do take time and effort, but it is worth investing your effort in. The intention here is to show your employees that you care about their concerns and are genuinely trying to help them.



Linkedin


Disclaimer

Views expressed above are the author’s own.



END OF ARTICLE



Leave a Reply

Your email address will not be published.

Back to top button