Employee financial wellness programs show life-changing results

(Photo: Bagotaj / Adobe Stock)

Employers recognize that financially well-off workers are healthier, more productive, miss less work, and experience higher job satisfaction.

Financially resourced employees should have minimal financial burdens, general financial stability, and the ability to retire on time.

Providing tailored financial wellness tools and information to employees can lead to these life-changing outcomes:

1. Increased creditworthiness

Data on Change in Financial Wellbeing: A 12 Month Study found that the creditworthiness of our financial wellness users increased by an average of 25.51 points after 15 months.

Having a strong credit score is important when buying a home or other important item. According to the data on the BankRate Mortgage Calculator at the time of this article, there were no home loans available for anyone with a credit score less than 620.

The interest rates are lower for those with higher credit scores. Someone with a credit score of 657 could get a 30-year fixed-rate mortgage at 3.48 percent. For a $ 270,000 loan, your employee would pay $ 435,387 over the course of the loan. However, if that employee had increased their credit score by 25 points, they could get the same loan at 2.87 percent and save over $ 32,000.

More importantly, higher credit scores have also been linked to better wellbeing, as in a. shown to learn from Harvard Business School.

The Harvard study found that “Credit scores predict life satisfaction even after controlling a range of financial covariates, including income, expenses, savings, debt, and home ownership. Respondents with higher credit ratings were more optimistic about their future, which helped happiness. In addition, the relationship between credit scores and well-being was moderated by participants’ prior knowledge of their score. Taken together, these results suggest that creditworthiness can plausibly increase well-being, directly or indirectly, meaning that credit-enhancing interventions could improve consumer well-being. “

2. Higher job satisfaction

A 2019 MetLife report, Financial Wellness Programs Foster a ThrivNumber of employees, found that the majority of workers believe that their employer has a responsibility to help them achieve their financial well-being. The report also found that employees who are on track with their financial goals are more engaged and satisfied with their jobs, are more committed to their employer’s goals, and are more productive.

The MetLife study found that employees who were on track financially were more likely to join the company a year later than employees who weren’t. PwC’s 2021 Employee Financial Wellbeing Survey found that nearly three in four employees with increased financial stress from the pandemic would consider getting a job with a company that cares about their financial wellbeing. The same PwC survey found that employees use and value financial wellness programs when they are offered. Of those who had access to financial wellness programs, 88 percent participated in the program.

Happier employees mean higher loyalty, which is important for the company’s bottom line. The costs associated with employee turnover are significant. The company for personnel management states that the fluctuation costs amount to six to nine months of the wages of the replaced employee, and even higher for executives.

3. Increased retirement savings

the Study on Change in Financial Wellbeing found that within one year, 15 percent more employees began participating in the company’s 401k plan, and 10 percent more began participating at the level required to receive the company’s bonus.

Increasing retirement benefits is vital for both employees and employers. According to Magnify Money 2021 Pension Statistics Guide.

  • The average U.S. household has a little over $ 255,000 in their retirement account, which is not enough to pay for health care bills in retirement
  • 49 percent of American households do not have a retirement account
  • Almost a third of Americans with a retirement account have withdrawn money from their account because of COVID, and nearly half have cut their contributions
  • 74 percent of employees plan to continue working after they retire

Prudential’s Cost of Delayed Retirements 2019 study found employers have higher costs and lower productivity when employees postpone retirement. Prudential put the cost at $ 50,000 per employee per year for a one-year retirement delay and an even higher cost for delays beyond two years.

4. Reduced financial stress

Employees are looking for ways to reduce financial stress, especially since the COVID-19 outbreak. Data from Enrich showed that after one year the participants’ average financial stress level down by 23 percent.

PwCs 9NS The annual Employee Financial Wellness Survey (2020) found that the leading cause of employee stress is financial matters, which was higher than all other stressors combined. Unfortunately, for companies, half of employees who experience financial stress have been distracted from their finances at work, compared to just 12 percent of those who do not experience financial stress. For this reason, it is imperative for employers to reduce employee financial stress.

5. Improved health

The National Institutes of Health have found a direct link between financial stress and wellbeing. In addition to causing depression and anxiety, financial stress can cause or worsen the following conditions:

  • Heart disease
  • stomach problems
  • Eating disorders including weight loss or gain
  • diabetes
  • cancer
  • high blood pressure
  • insomnia
  • psoriasis
  • Substance abuse

When you help your employees reduce their financial stress, you are also helping them improve their physical wellbeing – which in turn lowers healthcare costs.

6. Increased emergency savings

A recent study by Bankrate found that 61 percent of Americans couldn’t pay an emergency expense of $ 1,000. However, the data on changing the behavior of Financial Wellness shows that 27 percent of Enrich Financial Wellness program participants have built an emergency fund.

The study also found that on a five-point scale, an emergency fund reduced financial stress by about one point. Because reducing financial stress increases everything from commitment and loyalty to productivity and job satisfaction, offering an employee financial wellness program is a wise financial decision for any business.

7. Improved debt management

A Federal Reserve report shows that three out of four American households have some sort of debt, and the Federal Reserve Bank of New York’s Debt and Credit Report (Q2 2021) shows that household debt has reached $ 14.96 trillion . Of that, $ 4.19 trillion is accounted for by non-residential debt such as cars, credit cards, and student loans.

However, Enrich found that participants using their financial wellness program managed their debts better. The data show that:

  • 28 percent more pay off their credit cards every month
  • The average number of overdrafts per month fell by 40.7 percent
  • 32 percent more on track with their financial goals

8. Increased awareness of other employee benefits

According to an October 2020 report by Group Risk Development, 43 percent of employers believe their employees do not know or understand all of the benefits that are being offered to them. Since companies invest a lot of time, energy and money in these service packages, it is important to communicate the availability and value of these services effectively.

Kris Alban is Executive Vice President at Enrich Financial Wellness.

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