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How to improve financial wellbeing

“Wellness” has become a buzzword in recent years, particularly during the pandemic, as employees began looking more closely at their personal lives. A recent study showed us that 60% of Americans are living paycheck-to-paycheck! Combined with historical rates of inflation and economic distress, financial wellness is at the forefront of every worker's mind. 

Why is financial wellness important? It’s important because no matter what business you are in, you are in a people business. You can't do what you do without those sitting across the hall from you, and those people, believe it or not, are likely experiencing some form of financial stress. Financial stress can cause employees increased mental health concerns as well as a loss of productivity while on the clock. It is estimated that employers will lose 40 billion dollars this year in loss of productivity linked to employee financial stress! Implementing financial wellness benefits is a win-win for everyone. 

Improving financial well-being involves adopting healthy financial habits and making smart decisions about money. 

Some financial wellness topics for employees include: 

  • Creating a budget: A budget is one of the most frequent financial wellness tasks we complete. Creating a budget that allows you to live within your means and save for your future not only provides better stability for the individual but more productivity in the workplace. 
  • Save for emergencies: Setting up an emergency fund that can cover at least three to six months of living expenses can lower overall stress and anxiety in the event of an unexpected event, such as a job loss or medical emergency. 
  • Save for fun life events: Saving doesn’t just have to be for the hard things in life. One of the benefits of financial wellness is you gain the freedom and confidence to begin saving for the fun things in life, like a vacation!
  • Pay off debts: Make a plan to pay off your debts, starting with a simple debt repayment plan. Financial wellness programs offer employees resources to help them better understand their situation and eliminate common mistakes that will keep them from their financial goals longer.
  • Invest in the future: Consider investing in a retirement account, such as a 401(k) or an IRA, to build a nest egg for your future. You can also invest in individual stocks, bonds, or mutual funds to grow your wealth over time. 

While financial literacy is important, it’s equally, if not more important, for individuals to know how to improve their financial well-being. I was meeting with an older gentleman and his wife during a scheduled appointment once, they recently experienced some big changes in their family financially, and he told me all the things he knew they needed to be doing with their money. They knew they needed to increase their savings, pay down debt, and begin looking at their retirement strategy more carefully. For a second, it seemed strange that they were sitting in my office since they knew what they needed. The thing is, one big key was missing. They didn’t know HOW to do all those things effectively to create greater financial stability. 

Financial stability refers to a state where an individual or family is financially secure and has enough resources to meet their financial obligations in a range of situations. Here are ten factors that contribute to financial stability: 

  1. Adequate income: A stable source of income is crucial for financial stability. It provides the necessary funds to meet regular expenses and save for future financial goals. 
  2. Saving and emergency funds: Building a savings account and an emergency fund helps in managing unexpected expenses or financial emergencies. 
  3. The ability to make your payments on time each month: When we have the ability to make your payments on time each month, it shows the consistency the individual has been able to grow within their finances. 
  4. Contributing to a retirement account: Saving for retirement is important for long-term financial stability. Individuals should aim to save 13-15% of their income into a retirement account each year. 
  5. Regularly saving in a non-retirement account: Regularly saving or investing in non-retirement accounts helps create greater stability for other life purchases and circumstances, such as saving for a child's college education or purchasing a home.
  6. Stable income: Having a stable and predictable income leads to greater stability. While working on commission is fine, its shows vulnerability in stability and shows the importance of financial wellness in the workplace. 
  7. Paying down debt consistently: As we eliminate the need to pay for our past, we are able to strengthen both our current and future financial stability. 
  8. Affordable housing: Affordable housing costs are essential for long-term financial stability, as housing expenses make up a significant portion of most individuals’ budgets. 
  9. Adequate insurance: Having adequate insurance coverage protects individuals and their assets in case of unexpected events like accidents, illnesses, or natural disasters. 
  10. Access to financial education: Access to financial education and recourses like employee financial wellness programs help individuals make informed financial decisions, manage their finances responsibly, and achieve long-term financial stability. 

By paying attention to these factors, financial wellness for employees will improve, thus making your organization stronger. We can help!