Nearly 40 percent of Americans couldn’t cover an unexpected $400 expense, according to a 2019 Federal Reserve report. The organization surveyed 11,000 people and found that 27 percent of respondents would need to borrow or sell something to cover a surprise $400 expense, such as a car repair or appliance replacement. Roughly 12 percent said they couldn’t cover it at all.
The financial struggle doesn’t stop there though.
Roughly 25 percent of Americans skipped necessary medical care in 2018 because they couldn’t afford it.
Without savings to fall back on, many Americans are just one emergency away from financial hardship. That can cause people to worry about their financial state — now and in the future.
Money concerns can also impact other aspects of our lives, from our health to our job performance. In fact, employees with high financial stress are twice as likely to report poor overall health and four times more likely to suffer from fatigue, headaches, depression, or other issues.
Sometimes, employees just need the right resources and tools to get back on track.
Here are three ways you can help to improve employee financial well-being.
1. Find out which segments of your population need support with their financial health. Through our Flourishing Assessment, we ask employees questions to find out how they’re doing, based on the six domains of “human flourishing” (validated research by Sustainability and Health Initiative for NetPositive Enterprise at the Harvard T.H. Chan School of Public Health). One of those domains is “Financial and Material Stability.” Based on their self-reported answers, employees will be given a “Financial and Material Stability” score. This allows you to see collectively, “Who could benefit from financial tools and resources right now?”
2. Customize your employee financial well-being programs. Two-thirds of U.S. employers offer wellness programs, which sounds great — at first. However, when you dig deeper, many of these programs only focus on one aspect of a person’s well-being — their physical health. Employee financial well-being is rarely a focus. Using the population insights above, you can readily see who might be struggling with money and develop financial wellness programs tailored to them. Let’s say you notice that the population subset with the lowest “Financial and Material Stability” score is mostly recent college grads. They might be struggling to pay down snowballing student loan debt. Consider offering free, confidential financial coaching, specifically geared toward those trying to pay down debt. The program could help employees refinance their loans and negotiate discounts on loan rates.
3. Create benefits packages that support fiscal fitness. Peloton, a fitness startup known for its live-streaming cycle classes, offers $100 monthly contributions toward individual employee student loans. You might also consider offering sign-on or retention bonuses, which can be a great financial incentive to attract or retain top talent. Finally, you might encourage employees to “Save Their Raise,” direct-depositing their pay increase into their 401(k). To encourage participation, you could offer to match their contributions.
Your employees’ financial well-being has a direct influence on their total well-being. Studies show that nothing makes us feel happier or more confident than feeling like our finances are in order.
So why not help your employees get there?