The Case for Financial Well Being in the Workplace
As the current financial landscape becomes ever more complicated, there’s a growing disconnect in people’s ability to traverse that economic world. Many individuals are falling into financial pitfalls. These money issues translate directly into problems at work – financial health affects physical health, which in turn affects work performance, engagement, and finally productivity. For those reasons, many employers are exploring ways to promote financial well being in the workplace.
So what is financial well being? It’s a little different for each person, but can be summarized across three common indicators: effectively managing one’s money day-to-day, being ready to handle an emergency expense, and ability to save money. A good financial wellness program will address each of these three areas.
Financial problems lead to stress, and stress leads to a myriad of related issues. According to a study by the American Psychological Association, 72% of Americans reported feeling stressed about money in the past month. And this stress spills over into other aspects of their lives, including their health (both physical and mental), relationships, and work. Workers take more sick days, feel less job satisfaction, and are less productive when they’re stressed about money.
How employee financial stress affects employer outcomes is easy to see. Reductions in performance and productivity obviously drag down the bottom line, but there are subtler effects too. The negative impact of stress on employee health increases absenteeism and drives up the costs of offering health insurance. The need to promote financial well being in the workplace has never been more clear-cut.
As more and more options for increasing workplace financial literacy are being developed, we suggest that selecting a solution should be guided by data. An employer could pilot elements of various programs to determine which are best suited to its workforce. To start, it’s important to know where employees currently stand in terms of financial wellness. The Consumer Financial Protection Bureau has a questionnaire for this type of baseline assessment.
In research on workplace financial education programming, some best methodologies have emerged. Taking advantage of technology for lesson delivery and gamification components show promise. It’s crucial to choose programming for professional financial literacy events with the best quality of educational resources and instructors with the highest credentials. Enlisting peer support, project-based learning, and ongoing education also increase program impact.