4 way to improve employee financial wellness

On Tax Tuesday, 4 ways to help employees improve their financial habits

April 18, 2023 5:30 AM

Employees dread Tax Day, but a healthier mindset around money and their finances can help them feel empowered well beyond April 18.

As April is also Financial Literacy Month, employers should spend some time reviewing their financial wellness benefits: Do you have a 401(k) that will auto-enroll employees into a plan, and boost their contributions year-to-year? Are your benefits addressing needs beyond long-term savings, like student loan repayments, caregiving and child care costs, and emergency funds? Are you actually listening when employees tell you they need help?

For the majority of employers, the answer is yes: 97% of employers say they feel personally responsible for their employees' financial well-being, according to Bank of America. But it's vital to turn those feelings into action. Start by catching up on our top stories around financial wellness:

Make financial wellness part of your overall well-being strategy

According to ADP, 75% of employees want to work for a company that cares about their financial well-being. Employers are seeing the payoff of their efforts, with Bank of America's 2022 Workplace Benefits Report finding that 84% of employers say offering financial wellness tools helps with employee retention.

"Most financial wellness services have focused more on things related to health or retirement planning, but in a lot of cases, employees do not necessarily participate, especially if they are lower income and are struggling day-to-day," says Assad Lazarus, chief client and development officer at Purchasing Power. To address those daily needs, tools and benefits like early wage access, emergency savings accounts, financial wellness advice offerings, paid leave and loan forgiveness can all bring immediate relief to employees.

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Make financial wellness part of your overall well-being strategy

Debt stress is impacting retirement savings, and mental health

Employees' financial situation is taking a toll on their mental health — according to February's Mental Health Index by Telus Health, 40% of employees are feeling overwhelmed by their debt and financial responsibilities, and 28% have been digging into their savings to cover day-to-day expenses.

For many, these financial burdens are dealt with in silence: 71% of employees struggling with financial stress have not reached out for financial help or support, and 17% said that embarrassment was their main reason for keeping quiet. This group has poorer mental health than those who have taken advantage of coaching or other debt relief programs, the index found. Employers should be prepared to adapt and adjust their benefit strategies as employees continue to be impacted by evolving financial challenges, offering services like retirement savings plans, financial planners and advisers, and other go-to benefits to help employees manage their money — and their mindset.

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Debt stress is impacting retirement savings, and mental health

From student loans to retirement, financial wellness benefits need to help four generations of employees

No matter your age or status, employees can probably agree on at least one thing: they could use more money. Whether it's to pay off student loans, put a kid into preschool or college, or save up for a beach-front condo in retirement, what employees are spending on — and saving for — can vary significantly. That means that businesses have to be at the ready with options and strategies for a workforce with diverse financial needs and goals. Are employers up for the challenge?

"What has become incredibly clear is that a one-size-fits-all approach really doesn't fit anymore, since the needs of different parts of your employee base will vary pretty wildly," says Edward Gottfried, director of product at Betterment at Work. "The different kinds of financial balancing acts weigh heavily on different segments of your employee base, and your package should really be responsive to those."

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From student loans to retirement, financial wellness benefits need to help four generations of employees

Financial wellness benefit aims to teach kids about money

A lack of financial education for kids and teens can often snowball into young adults who are ill-equipped to manage their money. Greenlight, which created a kid-friendly debit card and accompanying money app, has launched Greenlight for Work, a benefits program that helps employees manage their family finances and improve literacy. Greenlight's partnerships with JPMorgan, T-Mobile and Morgan Stanley provided feedback that helped guide the development of the program, which offers a customized debit card and education on spending, earning, savings, investment and budgeting for kids.

"Financial wellness has really expanded over the past few years, but there really hasn't been anything that gives access to benefits for the whole family from a financial perspective," says Matt Wolf, SVP of Business Development at Greenlight. "[Families] are intertwined, so it makes all the sense in the world that employers are starting to focus on benefits that are family-friendly in ways that keep them happy and productive."

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Financial wellness benefit aims to teach kids about money