Thirty years ago, the executive suite didn’t spend a whole lot of time wondering whether their employees could pay the bills.
The attitude: We pay you and it’s up to you to decide how to spend that money.
Today, companies are confronted with the reality that not only are 78% of their employees living paycheck to paycheck, but their profound financial stress is affecting the corporate bottom line. That makes employee financial (un)wellness an executive problem.
I’m here today answering a few questions about employee financial wellness in a two-part series.
Q: How do you define financial wellness?
Financial wellness (or, you might hear the term financial well-being) is the process of learning to manage money in a way that leads to long-term financial security through growth, better money management and fiscally responsible choices. It includes things like building a budget to match your income, avoiding unnecessary debt, saving money for unexpected expenses and planning an income for life after the workforce.
In other words, ensuring your financial health is strong enough to support you in case you want (or need) to make a move in your career, allow you to buy a house or have a family, and live without the sense of impending financial doom.
Q: What areas of finance are normally covered in financial wellness programs?
Financial wellness platforms can cover a wide range of common financial issues such as effectively managing student loan repayment, saving money, paying down debt, improving your credit score, caring for aging parents, building a retirement fund and more.
Best Money Moves breaks financial stress into 15 categories and provides users with specific financial information relating to each. The platform also includes access to financial tools, calculators and videos that can help employees better visualize abstract financial concepts.
Q: Why do you think the need or demand for these programs has continued to grow?
In many ways, talking about money is still taboo — especially when it comes to talking about money at work. Millennials are better at talking about the money they earn than other demographic cohorts, but there’s not nearly enough conversation about what people earn and what they spend.
Employers are only now beginning to grasp the scope of financial stress within their workforce. Additionally, technology has now made it possible to collect and anonymize user information, which means that employees can report their financial problems and get help without the fear of another employee seeing their private information. And as more and more employees enter the workforce with huge amounts of student debt, financial unease is becoming more prevalent in the workplace. Savvy employers recognize the need for programs that address these concerns as part of their overall benefit or wellness packages.
Q: How is this growing interest related to the increased number of millennials and Gen-Z employees moving up in the workforce?
In general, millennials and Gen-Z employees start their careers with more debt than previous generations. Two-thirds of millennial employees have over $10,000 in student debt and one-third have over $30,000. So now more than ever, employers are seeing huge portions of their workforce delaying critical financial milestones, such as buying a home or saving for retirement, because they’re buried in student debt. Beyond that, employers are starting to understand that this level of financial stress also has an impact on retention and turnover, which impacts how employees progress in their careers.
Be sure to read Part 2 to learn why, and how, HR departments implement financial wellness initiatives.