How to Support Employee Financial Wellness

According to a recent survey, one in four people in the developed world is struggling financially. And, according to a PwC study from 2023, 60% of full-time employees are stressed about their finances — more than during the height of the pandemic. 

As an employer, there are things you can do to help your employees improve their financial wellness. And this isn’t just about being nice (though that’s important too) — there’s evidence that supporting employee financial wellness can have a significant positive impact on your business. 

In this article, we’ll discuss some of the practical resources you can put in place to help your employees, plus the effects that widespread financial stress can have on an organisation. 

Let’s jump in with a quick definition. 

‍

What is financial wellness?

‍

Financial wellness (or financial wellbeing) is the state of being able to make the most of your money and resources. It’s an important part of an employee’s overall wellness, which also includes physical and mental wellbeing. 

Financial wellness is a complex topic with many different strands. The Money and Pension Scheme (MaPS) in the UK breaks the topic down into four areas, which can make it easier to understand. They are: 

1. Behaviour: This is about what people actually do with their money. It includes managing day-to-day expenses, planning ahead and saving, and proactively seeking financial advice.
2. Mindset: This is about how employees feel about their money. It includes their level of financial confidence, the amount of control they have over their spending, and their savings goals. 
3. Ability: This is about employees’ knowledge and skills when it comes to finances. It includes financial literacy, understanding financial concepts, and knowing where to go for financial advice. 
4. Connections: This is about having access to reputable and reliable financial guidance.  

‍

All four of these things contribute to an employee’s overall financial wellness. In other words, an employee with a good level of financial wellness is able to handle their everyday spending, save for the future and deal with unexpected expenses. 

‍

The impact of poor financial wellness

‍

So… why should employers care about their employees’ financial wellness? The simple answer is that financial stress (i.e. the lack of financial wellness) can have a serious negative impact on an employee — which isn’t something most employers want to see. 

But widespread financial stress can also have a lot of negative consequences for a business as a whole. For example: 

• Increased absenteeism: According to the Society for Human Resource Management, financial stress results in a 34% increase in absenteeism and lateness. 

• Increased presenteism: People who are stressed about their finances are less likely to be fully present and engaged at work. In fact, 44% of employees who are stressed about their finances say it has been a distraction at work. Of those, 56% spend at least three working hours per week thinking about or dealing with their finances.

• Negative health outcomes for employees: 55% of employees say that financial stress has had an impact on their mental health over the past year, and 44% say it has impacted their physical health. In general, stress has been linked to numerous health conditions including sleep problems, headaches, anxiety and even heart disease and heart attacks. 

• Retention issues: These days, employees want their employers to provide financial wellness support — and they might not stick around if you don’t. Employees who are stressed about their finances are twice as likely to be looking for a new job than those who aren’t. 

• Reduced productivity: Over time, all of this can have a huge impact on an organisation’s productivity. In fact, one study found that financial worries result in the loss of 17.5 million working hours each year in the UK alone. 

‍

So… what can you do about it as an employer? 

‍

You get the point — employee financial wellness is a serious issue that shouldn’t be ignored. But in practical terms, what can you actually do to help your teams avoid financial stress?

The first step is to develop a financial wellness policy, which should encompass three core elements:

1. Pay a fair and liveable wage: No matter how many wellness benefits you offer, you won’t solve your employees’ financial problems if you’re not paying them fairly. The first step is to commit to paying at least the national living wage (in countries that have one). You can also benchmark your salaries to make sure your salaries are fair and competitive. 
2. Provide support for in-work progression: Most employees want to know there’s room for them to grow within your company. Helping them understand how they can move to the next pay level can have a big impact on their overall financial wellness. 
3. Provide financial education and support: Skills like budgeting, saving and managing finances generally don’t come naturally to everyone. And many employees don’t know where to turn for financial advice and guidance — or even whether such support is available. We’ll talk about some of the ways you could help your employees develop their financial literacy in the next section. 

‍

{{cta}}

‍

4 employee financial education benefits to consider

‍

Helping your employees to understand their money is a big part of ensuring their financial wellness. Here are a few ideas you could try: 

1. Workshops or webinars  

One of the simplest ways to provide financial education to your employees is to run regular workshops or webinars on topics like budget planning, savings tactics or reducing debt. You could invite guest speakers to deliver these workshops, or even have someone from your finance team put them together. Keep in mind that this is a very public way of learning about money, which might not suit all employees.

2. Self-service resources 

Many companies also offer self-service resources that employees can access in their own time. These might include on-demand, online lessons on various financial topics, or searchable knowledge bases where employees can find answers to their questions. Of course, you don’t have to build these things from scratch — many employee benefits providers can provide these resources for a low per-employee fee.

‍

3. Financial literacy courses

Financial literacy programmes are an invaluable way to teach employees how to make effective decisions about their money. You could develop a course yourself or sign up to one of the many existing ones, either in-person or online. Either way, the course should include things like: 

• How to identify spending triggers 
• How to draw up a realistic budget
• How to manage (and reduce) debt
• How to get started with investment 

‍

4. Individual personal finance coaching 

Some employees prefer to discuss their financial concerns in private, one-to-one conversations. For these employees, having access to an expert personal finance coach could be an invaluable benefit.  

Although this can be more expensive than other financial wellness benefits, having access to expert advice can help employees better manage their money and understand difficult financial concepts. This can massively reduce financial stress for employees — and improve their productivity, attendance and engagement. 

‍

Helping employees get the most out of your financial wellness benefits  

‍

Whatever financial wellness benefits you put in place, they won’t work if your employees don’t use them. Here are a few tips for getting the most out of your programme:

• Make sure employees know what’s available: If you want employees to benefit from your financial wellness programme, you need to make sure they know it exists. Think carefully about how you can communicate the financial wellness benefits you offer to encourage employees to use them. 

• Survey employees to find out what they need: Every employee is different, and what works for one person will be totally useless for another. Before launching any new benefits, survey your employees to find out what type of benefits they would like. 

• Personalise your benefits offering: Employees at different life stages likely have different priorities when it comes to their finances. Instead of taking a one-size-fits-all approach to financial wellness, consider offering a range of benefits that employees can choose from. 

• Make it part of your employer brand: These days, more and more employees expect their employer to provide financial wellness support. According to a recent survey, 74% would like more help with their personal finances. Showcasing your financial wellness benefits to potential job candidates could help you to win talent. 

‍

Making pay stretch further with financial perks

‍

As well as helping employers with their financial education, employers can provide an extra helping hand through perks and benefits that make each pay packet go further. Here are a few things to consider: 

• Generous pension schemes that help employees plan for the future 
• Flexible working arrangements to help save on commuting and childcare costs
• Discount vouchers for food, clothes and other everyday purchases
• Free food and drinks for employees working in the office 

‍

{{cta}}

‍

The role of compensation 

‍

Helping employees make the most of their money by improving their financial literacy can have a huge impact on their overall financial wellness. But none of that matters if you’re not paying them a fair and liveable wage. If a significant number of your employees are struggling to make ends meet, it may be the wake-up call you need to consider reassessing your salaries. 

Thankfully, we have the solution: Figures. You can use our platform to easily benchmark your salaries against the market to make sure your compensation is fair and competitive — and leave employee financial stress behind in 2024. 

‍