FINANCIAL WELLNESS

Financial wellness can be an important driver of employee engagement, because financial challenges impact the ability to be focused and engaged at work. A Gallup study suggests that 22% of adults suffer from extreme financial stress. At home, these employees are suffering from loss of sleep, lower self-esteem and conflict in their relationships — which then affects their ability to show up for work ready to tackle the day’s challenges.

They’re also keeping these issues to themselves. One study by PwC indicated that 41% of financially stressed employees were uncomfortable admitting that they were having financial issues.

Financial wellness programs can help provide the answers to those questions they’re embarrassed to ask, and help employees develop a plan for facing those financial challenges.

Here are five areas of financial stress that may be affecting employees:

Paying down debt

Many employees are concerned about credit card debt, student loans and other debt but continue to make only the minimum required payments each month. Financial wellness programs can help educate employees on how slowly their debts will be paid off at that rate and encourage them to find ways to apply more money to debt reduction. Raised awareness can also help them avoid future debt.

Managing spending against budget

Setting up a budget is one thing; understanding how to use it month after month is another. Help employees plan for how they’ll recover when they overspend one month — and how they’ll address those unexpected expenses like a car repair or a new roof. If they’re spending every dollar of their net income, they’re not leaving themselves room to accommodate surprises or splurges.

Maximizing 401K benefits

It can be tough to grasp the tremendous benefits of contributing to the company retirement plan, but financial wellness education can help employees see that pre-tax payroll contributions don’t impact their take-home pay as much as they might think. The company match and the power of compound interest are complicated computations — but important to communicate clearly.

Making the right benefits choices

Even though open enrollment happens every year, many employees still feel confusion over their choices. Which is better for their life stage or family situation — a lower premium or a lower deductible? What’s the cost difference if they go out of network? Benefits are a huge investment in employee compensation, so give them the financial education to make good use of them.

Planning for home ownership

Home ownership can be a bigger hurdle for today’s younger employees than it was for their parents, but it remains an important aspiration for many. Financial wellness programs can help them set realistic expectations of how much home they could afford and what steps they need to take before they buy — as well as how to get through the many steps of the mortgage process.