What is an employee financial wellness program and why is it important to have one?
As the cost of living continues to rise, it’s more important than ever for employers to implement an employee financial wellness plan. Financial wellness is about budgeting, debt management, and short-term savings. The goal of an employee financial wellness program is to help employers create a culture of financial stability and security for employees. An effective program will encourage employees to think about their current personal finances and future financial health.
What is financial wellness?
Financial wellness is a state of overall financial health and financial security. In a survey by AMP, it was revealed that 44% of Australians are unsure if they have enough money to retire and in addition, 51% of Australian don’t actually know how much they’d need to retire.
Having good financial wellness goes beyond simply having enough money to pay the bills or save for retirement. It requires knowing how to make decisions about where your money should be spent, how best to manage debt and be able to set and work towards your goals, such as buying a home or car. Having a stable financial support can also help you through tough times, like job loss or a sudden emergency.
Why does employee financial fitness matter?
An employee financial wellness program is beneficial for both employers and employees alike. In today’s world, financial issues are a major source of stress for many individuals, so an employee financial wellness program can help to relieve this stress, while also helping the company’s business objectives. Here are just a few reasons as to why having an employee financial wellness program matters:
Improved mental health is one of the most significant benefits to providing employee financial wellness. Financial stress can lead to feelings of anxiety, depression, and other mental health issues.
An employee financial wellness program can also provide guidance on effective money management strategies. This can help employees feel secure in their own financial situation, creating better focus at work.
Combat quiet quitting
Quiet quitting happens when employee morale is so low that they decide to detach emotionally, mentally and sometimes physically from their role. A variety of factors can lead to quiet quitting, but a sense of accomplishment, particularly around personal goals, can combat this mentality. When employees are closer to achieving their personal goals, which often depends on their financial position, they are more likely to find enjoyment in their work and increase their productivity.
Financial wellness can play a large role in workplace productivity. Employees who are burdened by financial worries often lack motivation and cannot concentrate as well on the task at hand, resulting in decreased productivity levels. 1.8 million Australian workers are suffering prolonged financial stress, costing $31 billion in lost productivity. As a result, financially stressed employees cost their workplace an average of 7.7 hours a week in 2020.
With a comprehensive employee financial wellness program, employees can gain the skills and knowledge to make better spending decisions, effectively manage debt, and plan for their long-term financial future—all of which free up energy that can be channelled into higher employee productivity and performance.
Morale & retention
High levels of financial stress among employees can also lead to higher turnover in the workforce. As employees become overwhelmed with their financial woes, they may choose to look for a new job. According to Metlife, due to personal stress and external pressures, over 55% of Australian employees feel stressed while they are working.
Similarly, lower morale from an employee’s financial situation may lead them to lack enthusiasm and drive at work. A comprehensive employee financial fitness program can help encourage loyalty, engagement, reduce stress for employees and result in improved morale from within the workplace.
Higher job performance
Employees with better money management may also tend to perform better at their job. Financial stress can lead to low morale, which can leach into company culture. When people are in tough financial positions, their productivity tapers, leading to even more stress. By helping employees empower themselves through financial wellbeing, employers are more likely to have more motivated and productive teams.
Promote a positive brand image
Having a comprehensive employee financial fitness strategy in place does more than just help your employees’ personal finances—it also can have a major impact on your business’s brand image. The public, your customers and partners will view you as a business that takes the wellbeing of its employees seriously. This improves workplace culture, which has an expansive effect that can help to bolster customer relationships and trust in your product or services.
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Reduce absences in the workplace
Finally, financial wellbeing programs can lead to fewer absences in the workplace. Studies have shown that an employee’s level of financial stress can be a key driver of absence in the workplace. When employees are faced with an unexpected expense, they may take time away from the job just to address their financial needs, leading to a drop-in productivity. By addressing financial wellbeing and providing resources and support, employers can help reduce unplanned absences.
The importance of investing in your employees’ financial health
If you’re interested in how you can improve the financial wellness of your employees with an employee financial wellness program, MyBudget’s program is a holistic approach that looks to relieve their financial pressures and mental wellbeing. By enquiring about our employee financial wellness program, your business will be one step closer to making an informed decision about reducing the negative impacts of financial worries of each individual employee.