The pandemic is helping employees prioritize financial wellness post-COVID
COVID-19 may have caused a lot of financial stress, but it actually helped some employees improve their situation.
Before the pandemic, one in five adults over the age of 18 did not have a financial plan, according to recent data from financial services company Northwestern Mutual. The year after, 32% of Americans said their financial discipline had improved during the pandemic, and 95% said they expect their newfound habits to be maintained.
“We see that the pandemic has caused many Americans to rethink their approach to financial planning,” said Christian Mitchell, executive vice president and chief customer officer, Northwestern Mutual. “In times of financial uncertainty, people tend to look inward, rethink financial plans, and rethink their financial decisions.”
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Overall, 83% of people were asked to either create, reconsider, or adjust their financial plan during the pandemic, as the data revealed. Major American behaviors include lowering the cost of living, paying off debts, and increasing their retirement savings and contributions.
Tackling financial wellbeing is a growing trend that the pandemic is exacerbating. More and more companies are adding services like financial coaching, access to affordable credit, and virtual education programs to improve financial literacy – companies like Kashable and HoneyBee are working directly with corporations and HR to make these resources directly available to employees.
“Financial wellness programs can be really effective at helping people take a holistic approach to their finances,” says Mitchell. “That’s why we’re seeing increasing demand for these programs. They can also help companies differentiate themselves in the increasingly competitive field of talent. “
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Employees have shown they want information beyond plan-specific functions – last year, according to custodian data, Schwab saw a 54 percent increase in virtual sessions on holistic personal finance topics versus a 37 percent increase in plan-specific topics.
Whether it’s support resources on topics like 401 (k) planning and workplace performance, Mitchell says employers will play a huge role in keeping employees on track.
“Employers need to support employees no matter where they are on their financial journey,” says Mitchell. “The path to financial security begins with developing a plan and encouraging employees to take these first steps encourages them to take additional action with their finances.”