When you think about financial wellbeing. What comes to mind? Does it mean having money in savings, paying your bills on time, having an investment or retirement plan? Are you one of those people who wait until April 14th to think about tax filing? Financial wellbeing really means different things to different people. Your employees are likely all at different places in terms of the approach they take to managing money.
Managing money is something that we can’t avoid. Money is the currency of the world. Maslow’s hierarch of needs shows us that we need money to thrive in our daily lives (think: food, shelter, clothing).
Stress associated with financial issues is abundant in our society and across the generations of the workforce. The American dream of a college education is becoming harder to afford. 71% of graduates of four-year colleges have student loan debt. The average monthly student loan payment (for borrower aged 20 to 30 years): $351. The average student in the Class of 2016 has $37,172 in student loan debt.
Credit card debt is another place our financial wellbeing often goes awry. Statistics on credit card debt reveal that 38.1% of all US households carry some sort of credit card debt. Households with the lowest net worth (zero or negative) hold an average of $10,308 in credit card debt.
Is retirement another American dream that is slipping away? “The vast majority of Americans have under $1,000 saved and half of all Americans have nothing at all put away for retirement “ according to CNBC Money columnist Ester Bloom
Thriving Financial Wellbeing
Research from the Gallup organization revealed the characteristics of individuals thriving in financial wellbeing. People with thriving financial wellbeing are:
- Satisfied with their overall standard of living
- Manage their personal finances well to create financial security, thus eliminating day-to-day stress caused by debt
- Spend their money wisely
- Buy experiences, over material things
- Give to others, not just spending on themselves.
What can employers do?
Employers play a big role in the financial aspects of their employees. Employers provide salary and benefits. For most working individuals, life would change dramatically if those disappeared. Here are a few ways for employers can help employees improve their financial wellbeing:
- Offer educational sessions to help employees with basic money management skills such as budgeting, and goal setting.
- Measure financial wellbeing as a key metric in your wellbeing program metrics. For example, look at the number of employees participating in retirement savings programs or the number of loans against retirement savings accounts.
- Offer an Employee Assistance Program (EAP). EAP services often include resources for financial issues.
- Educate employees on their options for investing 401K savings to help them maximize their returns.
- Offer programs that help employees pay down student debt and save for the future.
Improving financial wellbeing is good for everyone. Employers benefit when employees have less stress in their life. Employees benefit when they feel they are thriving in this important area of wellbeing.