The importance of achieving financial wellbeing

It’s no surprise that financial worry is a major stressor for American adults. In fact, according to the annual Stress In America survey of more than 3,000 adults, conducted by the American Psychological Association (APA), nearly 90% of respondents cited the increase in costs for everyday items as a significant source of stress. Stress over finances can manifest itself physically, emotionally and in job performance. In the last couple of years, we have seen a rise in corporations enacting programs to support employee wellbeing. The intention is good, the outcome may not be.

Personally, the word “program” implies something you do on the side, almost like it’s just another thing you check off on your benefits package list of options. Rather than “program” or “initiative”, I prefer the term “commitment.” Leaders back up commitments with target goals and investments. When leaders commit to the wellbeing of their employees, it shows that they care deeply about the people their profits are built by.

Core elements of a corporate wellbeing commitment

Wellbeing has four interrelated elements: physical, emotional, financial and work. Oftentimes, people treat the various elements of wellbeing as separate silos, but human beings are complex systems and they are interrelated. It’s hard to love your life but hate your work. It’s hard to struggle emotionally but have perfect work and physical health habits. Increased stress – from any source – without the personal and organizational resources to deal with it is a recipe for lower wellbeing in all four areas.

Financial wellbeing is directly connected to the pay employees earn and how it makes them feel. Financial stress is on the rise and the 2022 Personal Capital Wealth and Wellness Index indicates that only 53% of Americans are in a position to handle an unforeseen $500 expense without worry. Employers who commit to helping employees find agency over their financial wellbeing will deepen their employee relationships and generate better work, emotional, and physical wellbeing.

Financial wellbeing at the forefront of employee stress

The pandemic has been widely acknowledged as the lever that shifted power from employers to employees. At the same time, the workplace has become one of the few remaining safe havens for people to talk openly about topics long-considered taboo for the workplace such as social justice and pay equity. And, while the internet helped lift the veil on pay ranges, employers have enjoyed seemingly unchecked power over what people were paid due to the often-unwritten rules that forbade employees from sharing salary details with each other.

Regulatory changes, consumer pressure, activist shareholders, and now employee mass resignations have changed every part of why and how employers address topics like financial wellbeing. Companies have had financial planning and retirement savings programs for years. These programs have been part of a one-size-fits-all approach to benefits. Yes, a 401(k) is great but trying to offer a “how to save for the future program” is guaranteed to alienate 80% of employees. Instead, corporations should implement wellbeing commitments that include financial assessments so employers can meet employees where they are. Listening is the key to financial wellbeing, and financial wellbeing is a core part of a healthy employee experience.

An employee who is part of Generation Z and new to adulthood has very different needs than a member of the Millennial generation who may be supporting a young family, paying an expensive mortgage and shouldering hefty student loans. A highly paid executive will have different financial stressors than an hourly employee with few funds at their disposal. While demographic lenses provide multiple views into differing financial needs, one idea is universal to all members of the workplace:  employers must be supportive of their people, not just with how much they pay them; also, with trust, transparency and tools that they didn’t offer in the past.

Essential components of a financial wellbeing commitment

When it comes to financial wellbeing in the workplace, there are four essential components for a financial wellbeing commitment to work:

• Listening. As the benefits or HR leader, understand where people are financially by using polls, surveys, and data that you have about people and their compensation so that benefits leaders or HR leaders understand the people they are serving. For example, Limeade has listening tools built into wellbeing with our financial assessments provided by the Consumer Financial Protection Bureau (CFPB) that allows corporations to “hear” the biggest financial stressors. With science-based polls, surveys and quizzes, employers can discover where employees are most stressed and what they say they need most.
• Understanding your population. Get real-time insights into the financial health across your employee experience and discover hot spots with customized dashboards for burnout and turnover related to finances. You might find that you don’t need to raise everybody’s salary by $3,000 across the whole company to dramatically reduce the financially-driven turnover (or health) risks in your organization. When Limeade conducted an audit of our equity practices, we wanted to make sure we had total equity across the different classes of employees. What we discovered is that we were off in a couple of areas, and we immediately took the necessary steps to correct the issue.
• Organizational support. Consider these the basics that organizations give to employees. Like, compensation. Are employees being paid a fair wage? Are there retirement tools in place? Is there affordable health care (high deductible plans and fully insured plans) so people can make smart health care choices? What about credit score monitoring or financial literacy programs tailored to fit individual needs? When employees feel cared for by their employer, engagement increases. Investing in financial wellbeing boosts the overall wellbeing of employees. For example, think about your middle manager, one of the most important people in your organization. They have a team that they support and part of that is checking in to see how their people are feeling and why. They get attuned to the financial stresses that are affecting their people. Having informed managers engaged in these types of conversations helps create a whole empowered manager class that connects leadership within the organization.
• Wellbeing tools. Incorporating wellbeing tools into the workplace allow employees to dig deeper into finding solutions that work specific for their individual needs and double-click into their financial stress. Limeade financial wellbeing capabilities include dashboards that playback financial health and wellness and communicate things like how to maximize 401(k) retirement funds or budgeting tips to decrease financial stress. Essential benefits can be targeted to the right people at the right time with personalization and relevant communications and targeting.

Read more: How a financial wellness program can help attract and retain employees

Employees should feel that their financial goals are achievable. Their bosses can show they care about their employees’ financial goals by procuring – and more importantly authentically promoting – tools that will help people succeed. Lowering financial stress is essential to the wellbeing of your people. Their wellbeing is essential to delivering business results.

Henry Albrecht is the CEO at Limeade.