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How financially healthy is your workforce? Financial wellbeing statistics every employer should know

Being financially well does not happen overnight for most individuals and families. For some, achieving a measure of financial stability and wellness can also feel nearly impossible to achieve. Current financial wellbeing statistics describe the growing wealth divide, lack of savings, medical and credit card debt crisis, lack of retirement preparedness, shortfalls in financial literacy, and extreme mental and emotional stress caused by personal finance issues. Here’s some of that data:

Savings and emergency funds

  • One survey found that only 39% of Americans had enough savings to cover a $1,000 emergency expense.
  • The Federal Reserve reported that 37% of adults would have trouble covering a $400 unexpected expense without borrowing or selling something.

Debt and credit

  • According to the Federal Reserve’s most recent comprehensive study (Q2 2021), the total household debt in the U.S. was approximately $14.96 trillion.
  • The average credit card debt per household with credit card debt was $7,113 (Q1 2021), according to Experian.

Retirement savings

  • The Employee Benefit Research Institute (EBRI) reported that only about 48% of workers were confident they would have enough money for a comfortable retirement.
  • According to a survey by the National Institute on Retirement Security (NIRS), the median retirement account balance for working-age households was $3,000, and for households near retirement, it was $12,000.

Financial literacy

  • The FINRA Investor Education Foundation's National Financial Capability Study found that only 34% of Americans were able to answer four out of five basic financial literacy questions correctly.
  • The Global Financial Literacy Excellence Center (GFLEC) reported that the U.S. had a financial literacy rate of 57%, indicating that slightly more than half of adults understood basic financial concepts.

The wealth divide

  • According to the U.S. Census Bureau, the Gini coefficient, a measure of income inequality, was 0.485, indicating a significant level of income inequality in the U.S.
  • Financial Stress and Mental Health
  • A survey by the American Psychological Association (APA) found that 64% of adults reported that money was a significant source of stress.
  • The National Endowment for Financial Education (NEFE) reported that 68% of U.S. adults felt stress about money at least once in the previous month.

Employee financial wellbeing programs are designed to help minimize and alleviate employee financial stress by providing support, accountability, tools, and resources for navigating an already complex personal finance landscape. Having the right support is the bedrock of employee financial wellbeing. Companies with financial wellness programs demonstrate a commitment to the overall wellness of employees, their families, and their futures. In fact, the best financial wellness programs will demonstrate an impact in these areas:

  • Improved employee wellbeing: Financial stress can have a significant negative impact on employee well-being, leading to increased stress, anxiety, and even physical health issues. Financial wellness programs provide employees with the tools and resources to better manage their finances, reducing stress and improving overall well-being.
  • Increased job satisfaction and engagement: Employees who feel supported by their employers in managing their financial situations are likely to experience higher job satisfaction and engagement. When employees are less distracted by financial concerns, they can focus more on their work and contribute effectively to the organization.
  • Enhanced productivity: Employee financial stress can lead to decreased productivity as employees may be preoccupied with personal financial issues during work hours. By addressing these concerns through financial wellness programs, companies can help employees stay focused and productive.
  • Reduced absenteeism: Employee financial stress can contribute to absenteeism as employees may need time off to deal with financial issues. Financial wellness programs can help employees manage their finances more effectively, reducing the need for unplanned time off.
  • Lower turnover rates: Employees who feel supported and valued by their employer are more likely to stay with the company. Financial wellness programs can contribute to higher employee retention rates by improving job satisfaction and reducing financial-related stressors that might lead employees to seek other job opportunities.
  • Positive employer branding: Offering financial wellness programs demonstrates that a company cares about the financial well-being of its employees. This can enhance the company's reputation and make it more attractive to potential job candidates.
  • Increased retirement readiness: Financial wellness programs often include retirement planning and education, helping employees better prepare for their future and make informed decisions about their retirement savings.
  • Better financial habits and financial health: Financial wellness programs can teach employees about budgeting, saving, investing, and debt management. These skills can lead to improved financial habits that benefit employees both personally and professionally.
  • Reduced financial distractions: Employees who are burdened by financial concerns may experience distractions at work, affecting their ability to concentrate and make sound decisions. Financial wellness programs help alleviate these distractions, leading to a more focused and effective workforce.
  • Customized benefits: Financial wellness programs can be tailored to the unique needs and demographics of the workforce, ensuring that employees receive relevant support and guidance.

These are just a few financial wellness benefits for employees you will see. It's important to note that the actual impacts of financial wellness programs can vary depending on the design and implementation of the program, as well as the individual needs and responses of employees. However, by addressing the financial wellbeing of employees, companies can create a more positive work environment and foster a culture of support and empowerment.

Moreover, here are some financial wellness program ideas to include in a financial wellness program:

  • Financial education workshops: Offer workshops on topics such as budgeting, saving, investing, debt management, and retirement planning. Invite financial experts to lead these workshops or consider online resources and tools.
  • One-on-one financial counseling: Provide employees with access to financial counselors or advisors who can offer personalized guidance and advice on managing their finances. 
  • Online financial resources: Curate a collection of online resources, articles, videos, and interactive tools that employees can access at their convenience to improve their financial literacy.
  • Debt management assistance: Offer tools and workshops to help employees manage and reduce their debt, such as strategies for paying off credit cards, student loans, and other debts.
  • Retirement planning support: Provide resources and guidance on retirement planning, including information about different retirement accounts, investment options, and strategies for building a retirement nest egg.
  • Savings challenges: Organize savings challenges or competitions to encourage employees to save money for specific goals, such as an emergency fund or a vacation.
  • Student loan repayment assistance: Offer programs that provide financial assistance to employees with student loans, for example, public service participants who can benefit from student loan forgiveness programs. Helping employees understand their options, such as contributions toward loan payments or refinancing options, is crucial.
  • Credit score improvement workshops: Help employees understand the factors that affect their credit scores and provide strategies for improving and maintaining good credit.
  • Healthcare and insurance education: Educate employees about healthcare costs, insurance options, and strategies for maximizing the benefits of their health and insurance plans.
  • Financial goal setting: Assist employees in setting and achieving financial goals, whether it's saving for a down payment on a home, paying off debt, or funding their children's education.
  • Wellness fairs and events: Include financial wellness booths and sessions as part of your organization's wellness fairs or employee events.
  • Flexible compensation planning: Provide information on flexible compensation options, such as flexible spending accounts (FSAs) and health savings accounts (HSAs), to help employees optimize their benefits.
  • Emergency fund building: Encourage employees to establish emergency funds and provide guidance on how to set aside funds for unexpected expenses.
  • Investment workshops: Offer workshops on investing basics, diversification, risk management, and strategies for long-term wealth accumulation.
  • Mentorship and peer support groups: Create peer support or educational groups where employees can increase their knowledge in managing financial challenges, successes, and strategies for financial wellness.

The best employee financial wellness programs will provide employees with the support and guidance needed to manage financial shocks and ultimately help them feel secure in their financial future. This can be the best method for improving an employee’s personal financial wellbeing statistics.