How to build a financial well-being program from scratch

In today's fast-paced and financially complex world, employees' financial well-being plays a pivotal role in their overall happiness, productivity, and sense of security. According to PwC's 2023 Employee Financial Wellness Survey, 57% of employees cite finances as the top cause of stress in their lives (Pwc.com, 2023). As a result, forward-thinking organizations are recognizing the need to prioritize their employees' financial journeys and are taking proactive steps to implement comprehensive financial well-being programs. These initiatives can make a significant difference in the lives of their workforce and foster a thriving, resilient workplace culture.

Why Employers Should Prioritize Financial Well-Being

“The road to financial well-being begins at work. People see their employer as more than just a paycheck. Often, they view their employer as a trusted resource for information and guidance." - Catherine Golladay, President of Schwab Retirement Services

Our financial decisions affect our performance: our ability to save money, our ability to cover unexpected expenses, but also how much we are present at work.

The impact of financial decisions on employee performance extends beyond just their ability to save money or cover unexpected expenses; it also affects their presence and engagement at work. Therefore, employers have a unique opportunity to gain a competitive advantage by supporting their employees in gaining control over their finances, understanding financial concepts and goals, and knowing the necessary steps to achieve them. Such support can also contribute to employee retention, as financially secure employees are less likely to seek new job opportunities.

Going Beyond Salaries: Factors Affecting Financial Well-Being

Financial well-being for employees is not solely determined by their salaries. Other critical factors come into play, including debt management, financial literacy, savings habits, the predictability of short and long-term expenses, and the impact of rising housing costs.

Regardless of the generation, employees seek financial guidance in dealing with various financial decisions, crises, or life events, as reported by 74% of individuals (Pwc.com, 2023).

The Power of Financial Planning

Developing a written financial plan can be a game-changer for employees. Individuals who take the time to document their monthly expenses, savings goals, and strategies to manage their finances often experience more significant progress. According to a survey by Schwab, 65% of people with a written financial plan feel financially stable, compared to only 40% of those without one. Furthermore, 54% of planners express "very high confidence" in achieving their financial goals, compared to a mere 18% among non-planners (Schwab, 2021).

One common misconception is that planning is reserved for those with substantial financial means. However, regardless of their current financial state, every individual can benefit from financial planning. Employers can play a crucial role by providing the right tools and support to help employees get started on their journey to financial well-being.

Taking Action: The Key to an Effective Financial Well-Being Program

Changing human behaviour, particularly when it comes to financial well-being, is no easy task. Behavioral economics, which combines psychology, neurology, and economics, offers insights into bridging the gap between intentions and actions.

What obstacles should you prepare for in advance?

• People tend to choose the simplest option, which often means doing nothing. Employers can help guide employees toward the right behaviors by making the desired choices simple and straightforward.
• Decision Paralysis: When individuals face an overwhelming number of choices, they may struggle to make decisions. By providing fewer options, employers can increase the likelihood of employees making a choice.
• Decision Fatigue: The more decisions employees have to make, the more likely they are to experience decision fatigue, leading to suboptimal choices. Employers can mitigate this by prioritizing the most important decisions and presenting them first.

Beyond Education: Empowering Employees for Lasting Change

While education is essential in improving financial literacy, it alone is insufficient to drive substantial progress in employees' financial well-being. Providing educational resources about personal finance is undoubtedly valuable, but to effect lasting change, it must be complemented by actionable initiatives and ongoing support.

Financial well-being requires not only knowledge but also practical application and behavioural change. To empower employees fully, employers must go beyond education and offer action-oriented programs that help translate knowledge into tangible progress. This includes providing tools, guidance, and an environment that encourages positive financial behaviors.

By acknowledging that education alone is not enough, organizations can adopt a comprehensive approach to employee financial well-being. This approach encompasses not only educational programs but also resources for financial planning, goal setting, and ongoing support. By empowering employees to take meaningful action and providing the necessary tools and assistance, organizations can make a genuine impact on their employees' financial well-being.

Join Us On The Journey To Financial Well-Being.

The significance of employee financial well-being cannot be underestimated. It profoundly influences their happiness, productivity, and overall sense of security. That’s why forward-thinking organizations are taking proactive steps to support their employees in achieving financial well-being.

In the upcoming parts of our financial well-being series, we will delve deeper into specific strategies, best practices, and success stories from organizations that have successfully implemented comprehensive financial well-being programs. Stay tuned for our upcoming articles, where we will explore actionable steps you can take to empower your employees on their financial journeys.

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