By Heather Lawrence, CFP®, CTFA
Director, Chief Financial Planning Officer
To look at this, let’s first define what “financial wellness” means. According to researchers at Gallup, financial wellness is how you manage your economic life. What goes into the financial management of your economic life can be vastly different depending on the person you ask - age and stage of life have a lot to do with what one might need. The term “financial security” is also closely linked to the concept of financial wellness.
Why is financial wellness suddenly gaining so much attention?
In the past, a financial wellness program for many companies was centered around their 401(k) plan. There usually was not much beyond getting employees to participate in that plan. Some basic periodic education about their investment choices was added. What companies and employers have come to learn over the past several years is that an employee’s personal financial situation can have a significant impact on the expenses the company incurs due to the employee dealing with financially stressful situations. When looking at why companies are now implementing financial wellness programs that deal with more than just the 401(k) plan, MoneyFit.org notes that “these programs promote greater employee stability, productivity, and loyalty while reducing the time employers spend on garnishments and paycheck advances all at little to no cost to the employer.” Reducing employee turnover and finding the right people to hire are much bigger challenges for many businesses across all types of industry than they have been in a long time.
With the craziness of the pandemic over the last two years, and the Great Recession that was not too long before that, personal financial stress has increased for the vast majority of adults. Many companies have had to lay off workers, cut salaries, not give bonuses and make other cutbacks. According to the PwC 2021 Employee Financial Wellness Survey (2021 Employee financial wellness survey: PwC), “finances are the top cause of employee stress: more than job, health, and relationship stress combined.” An updated survey done for the National Endowment for Financial Education (Survey Update to COVID Related Financial Stress (nefe.org)) shows that many Americans have experienced little to no relief on their financial stress since the initial outbreak of COVID-19. Of the people surveyed, 74% said they have had to make financial adjustments such as cutting expenses or putting off major financial decisions; 23% had to use emergency savings or borrow against their retirement savings. Many are having a challenging time making ends meet and they are worried about how they will pay their bills.
Financial stress is not going away anytime soon, and that personal financial stress can impact the bottom line of the business! The 2019 SalaryFinance.com Employer Guide to Financial Wellness (salaryfinance.com) found that financially stable employees can complete daily tasks at a rate nearly six times that of the financially stressed employees. The PwC survey also found that when an employee has increased financial stress, they are more likely to be attracted to another company that cares more about their financial wellness.
After such a stressful span of time, many people want to be better prepared for a personal financial crisis- and employers are more willing to help by implementing programs and tools. Numerous articles and surveys noted that having access to a financial wellness program is one of the top three benefits people want from an employer. Businesses are recognizing the need for financial wellness as a part of their benefit offering to help retain and attract employees and to help protect against the rising costs of lost productivity and increased human resources administration challenges. When employees are better personally financially prepared, everyone benefits.
How Do You Get Started?
If you want to begin working on your own financial wellness, we suggest starting with the following questions:
Much like physical wellness, financial wellness is a journey that takes time and effort to make positive changes. Many more companies are offering programs and tools to help their employees improve their financial health. If you are ready to make changes, there may be more resources available to help you than ever before. Now is the time to start!
At Resilience Wealth Advisors, we partner with our clients as they make this journey, and we help with all aspects of the creation and implementation of financial plans. Our focus is on our clients’ goals and priorities, while helping them to create a more resilient financial life.