You’ve probably heard the term “financial wellness” being thrown around in business circles, as a way for individuals to describe a sense of financial security, of understanding their financial options, and building a monetary foundation in order to pursue future goals. But what ways can you, as plan sponsors, ensure financial wellness for your employees?
1. Provide Education
The first thing any employer can do is figure out what their employees need in terms of education. Financial education is essential at any age, though your younger workers may need more help with debt management strategies, while your older employees could use more coaching on how to maximize their retirement savings.
Once you have assessed employee needs, you can develop a strategic plan to meet them. From financial seminars to one-on-one coaching, there are many options to provide education to your employees. I recommend implementing a mix of strategies in order to discover what will be most effective for your company.
2. Emphasize the Importance of Short- and Long-Term Saving
Along with general financial education, emphasizing the importance of short- and long-term saving is crucial to the financial wellness of your employees. A 2014 study done by the Federal Reserve found that 47% of respondents would have to borrow or sell something to cover an emergency expense of $400. (1) As employers, this should worry you. If your employees are in this position, the stress of financial uncertainty could be affecting their job performance.
Encouraging saving can be done in many ways. In conjunction with educational meetings, meetings to discuss savings strategies can generate new ideas and foster a sense of community among coworkers. Simple suggestions, such as diverting a small portion of your paycheck to a savings account automatically, can give way to more rich discussions of long-term savings strategies.
3. Bringing Awareness to Managing Debt
In addition to saving, shining a light on debt management is extremely important to the financial wellness of your workforce. On average, an American between the ages of 18 and 65 has $4,717 of credit card debt. (2) With their debt increasing, your employees may not feel they are able to both pay down their debt and save for their future. It is your job to tell them that those are not mutually exclusive goals. They can do both—and need to—to be financially healthy.
Some companies have started to offer confidential debt management counseling for their employees. Similar to if your employees lack emergency funds, being in debt and worried about making payments can cause workers to get distracted and make mistakes. Helping them get a handle on their debt leads to benefits for both the company and the individual.
4. Automatic Enrollment in Retirement Plans
An easy step companies can take to ensure financial wellness for their employees is to automatically enroll their employees in company-sponsored retirement plans. The most common reason my clients give as to why they did not enroll right way is they were overwhelmed with starting a new job and all the paperwork that goes with it. They figured opting in to their retirement plan was something they could do later, after the whirlwind of new job responsibilities died down.
But then they forget, and six months or a year goes by without saving a penny towards retirement. Switching over to automatic enrollment saves your employees the hassle of setting up their accounts, which can be overwhelming for anyone but especially to younger employees who are new to the work force. Doing this, along with providing education on how much they should be putting away according to their goals and desired retirement age, can alleviate undue stress and contribute to overall financial stability.
5. Provide Tools
Lastly, employers can provide tools to help their employees take control of their financial situation. Some educational tools, like SmartDollar, employers can make available as part of their employee benefit packages. But the truth is, you don’t have to provide everything, but you can help educate your employees on what tools are available.
There are countless money tracking and managing apps out there to help simplify your finances. Diving into this world can be daunting, but focusing on a couple apps and their functions at the end of a financial education meeting can give your employees an introduction to this technology.
How We Can Help
Do you think you could be doing more to ensure the financial wellness of your employees? PlanPILOT can help you create a strategic plan to figure out your employees’ needs and how to meet them. Call us today at (312) 973-4911 or email info@planpilot.com. Together we can make sure that your employees are thinking about and working towards a more financially secure future.