HR professionals are always on the lookout for the best in employee benefits – more specifically, a robust well-being program for companies who truly want to help their teams get in better shape financially.
It’s no longer possible to ignore the ongoing personal finance crisis that’s affecting the lives of millions of American workers. Many employers already have a financial wellness program, and the number who do keeps rising. Despite those efforts, the average employee is still broke:
Vulnerable to emergencies. Sixty-nine percent of Americans would be unable to cover a $1,000 emergency today without borrowing. They’re one bad day away from a financial catastrophe.
Staggering levels of debt. Nearly half of Americans owe at least $25,000 in non-mortgage debt, with $37,000 being the average amount. Among all borrowers, 40 percent spend about half their monthly income servicing it.
Unprepared for retirement. Because of the first two issues, most Americans can’t even think of beginning to invest for the future. So it’s no surprise to find that about half (49 percent) of non-retired adults don’t believe they’ll be financially prepared to retire when their career ends.
Why aren’t existing financial wellness programs helping? Because too often there’s a mindset of checking the box instead of getting at the habits preventing employees from gaining and maintaining real financial wellness. If all we need to do is help employees manage their debt, we’ll never address the underlying issues causing widespread money stress: the wrong behaviors around debt and savings.
To get the right focus, it helps to view financial wellness the same way you would physical fitness. To get in shape, having a gym membership, world-class equipment, a library of fitness books and even elite coaching are not enough to get the job done. All of those things are great, but none are as essential as changing daily habits toward healthy eating and exercise.
Financial wellness is the same! Great options like tools, apps, investment advice, or 401(k)s may do a lot of good—but only after employees have learned how to leave behind bad habits and replace them with positive behaviors around money.
One popular approach to financial wellness is the offer of one-time or annual face-to-face meetings with a financial advisor. There’s just one problem with this as a blanket solution—it addresses an issue (how to invest wisely) that many employees simply aren’t ready to jump into yet. And it ignores what they’re really going through with debt and emergencies. Not to mention it’s hard to scale to large workforces—the time and logistics alone require a large step from participants that are busy and scared to death.
From the snapshot we saw of the typical worker’s wallet, most aren’t even budgeting well. So how many are going to show up for a meeting to plan new investments for retirement? This well-intentioned idea misses the mark. Retirement is indeed a key part of financial wellness, but the only way to help get employees on track for the end of their career is to help them address the basics of emergency savings and debt elimination.
Tools and apps
Many financial wellness programs offer tools designed to help employees in key areas: budgeting, mortgage calculators and investment calculators. While these are all essential pieces of the wellness puzzle, they must be paired with crystal-clear teaching around wise spending, getting out of debt and having enough savings and insurance in place to protect employees’ assets. Otherwise, they’re just curb appeal on a shack.
Apps are another popular angle of financial wellness that are sometimes driven more by hype than substance. For example, micro-investing apps are becoming a pretty popular form of investment. The concept allows users to sync with a bank account to set up automatic savings transfers or invest small amounts of money in stocks. Some companies are even offering access to micro-investing as an employee benefit.