Financial wellness is a necessity for employers to offer: Here’s why
Many employees don’t know where to start to reach short- or long-term financial goals – especially when 2/3 of Americans are living paycheck-to-paycheck.
Financial wellness allows people to enjoy life, achieve their goals, and spend money in ways that benefit their future. It’s about making decisions that help individuals take control of their bank account, and ultimately achieve their goals such as being debt free or building their retirement savings to a comfortable level. The path to financial well-being is unique to each person as many people experience different challenges throughout the process.
Financial planning looks at the entire picture – current pay, outstanding debt, loans and income potential and of course liquidity requirements – to determine strategies for the future that will help employees meet their short- and long-term goals. Short-term goals can include plans to reduce expenses, save money for a down payment on a home, or to establish an emergency fund, but the first step is to examine the current state of funds and what’s coming in and what’s going out.
On the other hand, long-term goals are strategies that will define future success and take more time to accomplish, such as savings to send their kids to college, putting money toward retirement or paying off a 30-year mortgage. Money is deeply personal, so goals will vary depending on preferences.
Financial wellness is about achieving a state of well-being that allows employees to manage their expenses, debt and any other unexpected financial situations without financial stress. According to a CNBC+ survey, only 57% of adults in the United States are financially literate, meaning that 43% are not using the right tools or lack the knowledge to budget or invest. Additionally, as stated in a recent LendingClub press release, 63% of Americans are living paycheck-to-paycheck and have not been able to reach a level of financial wellness.
Related: Financial wellness: Tailoring a program to specific employee needs is key
Many employee benefits packages include typical offerings like 401(k) matching, health insurance or reimbursements. While some benefits address key items that help future planning, many employees still don’t know where to start – especially when 2/3 of Americans are living paycheck-to-paycheck.
Financial wellness as an employee benefit enables employees to become financially literate. Employers can do their part through benefits offerings that provide employees access to financial wellness tools such as low-cost loans, credit monitoring and saving options as well as fun and engaging educational materials. An inclusive financial wellness benefits package should include resources and tools to help employees achieve financial freedom.
Nowadays, for employers, financial wellness offerings are a way to beat competition and retain and attract talent in a competitive labor market. Employers can make a difference by adopting comprehensive financial wellness benefit packages and it doesn’t have to add cost to the employer to do so.
As the workplace continues to change throughout the “Great Resignation,” a looming recession and other factors affecting the workforce, it’s more important than ever to make sure that employers are offering top-of-the-line benefits that will improve financial wellness.
Einat Steklov is cofounder of Kashable.