January is Financial Wellness Month – Here’s How You Can Take It to the Next Level
Recognized annually in January, “Financial Wellness Month” reminds us to think about and pay attention to our financial well-being. Everyone wants to make and save money. But not everyone knows how to balance their budget for success.
Within the past decade, financial wellness programs burst onto the employee benefits scene to help tackle this issue. Now, employees want even more support to address their financial stress head-on.
According to the 2022 PwC Employee Financial Wellness Survey, approximately 56% of employees experience some form of stress related to their financial situation. Many of them spend time worrying about it at work, which can lead to bad habits, poor health and sick days. This, in turn, can harm productivity and your bottom line.
What is financial well-being?
The Financial Consumer Agency of Canada has adopted the U.S. Consumer Financial Protection Bureau’s definition of financial well-being as:
- Control over day-to-day and month-to-month finances
- Capacity to absorb a financial shock
- Ability to remain on track to meet financial goals
- Freedom to make the choices that allow you to enjoy life
Financial well-being is not living paycheck to paycheck or racking up credit card debt to cover everyday expenses or unexpected bills.
Rising debt
The statistics are clear. Canadians are shouldering more debt and struggling to save. Nearly 5 out of 10 employees are living paycheck to paycheck, according to the Canadian Payroll Association.
About 44% of Canadians are $200 a month away from insolvency, according to accounting firm MNP. It’s understandable: Equifax revealed household debt including mortgages was at $20,967, while Ipsos revealed that the amount without a mortgage stood at $8,539. And since half of Ipsos respondents revealed they had no consumer debt whatsoever, those who do have a lot more than these numbers revealed.
Ratesupermarket.ca polled 6,090 credit cardholders and yielded some valuable insights:
- The average amount of credit card debt was $2,627, yet the numbers were skewed by the fact that close to half of the respondents had less than $1,000.
- 20% of respondents had more than $5,000 worth of debt
- Credit card debt is what people worry about most (at 34%), followed by mortgage debt (22%).
- Student loans only had 9.2% of respondents worried.
Educating employees
Financial well-being is a life skill. Once the debt is there, it doesn’t just go away. And the money available to pay off the loan can be hard to come by. It’s easy to see why employees are falling short of paying off their debt and worrying about financial stability.
To help address the gap between planning for the future and understanding how to make good financial decisions on a daily basis, basic financial education is a must.
It’s not easily addressed in one-and-done courses. Employees want and need high-touch training like seminars and one-on-one coaching. They also expect access to resources to help them reach their goals.
According to the Society for Human Resource Management, a global HR professional society, only 22% of organizations offer group or classroom financial advice, 27% offer one-on-one advice and 24% offer employees online financial/investment advice.
Here is how you can help increase those percentages.
Teaching fundamentals of finance
Many financial wellness programs fail to consider an employee’s lack of basic economic knowledge. Without this foundation, employees are less likely to engage in positive savings behaviour, plan for retirement or have an emergency fund.
You will want a program that focuses first on basic financial management skills. This may include lessons on:
- Evaluating your current financial situation
- Learning how to create a budget
- Managing your debt
- Avoiding costly financial mistakes
Everyone thinks and relates to money in different ways. Employees will have unique goals. But informed decisions will lead to positive behaviours.
Providing tools for success
You will want to offer a comprehensive, integrated program to support your employees’ financial success. The market is flush with financial planning software to help employees set goals and track their progress.
These tools can help individuals:
- Pay off debt
- Save for their child’s college education
- Accumulate a down payment for a house
- Plan for retirement
Access to financial advisors, coaches or planners can also help. Trained professionals can assist with more advanced techniques like evaluating current assets and investing for retirement.
Free online sites like the Financial Consumer Agency of Canada’s website have resources such as a budget calculator to help make a budget and allocate funds strategically.
Regardless of the tools you select, supporting your employees through the process of financial planning will encourage their continued fiscal responsibility.
Encouraging participation
Because of the personal and confidential nature of financial well-being programs, many employers struggle with participation. Employees can be self-conscious about their lack of knowledge or intimidated by the topic. At the same time, they may complain the material is overwhelming or stressful.
To encourage involvement, you may want to offer financial incentives. Matching funds already set aside by the employee rewards their commitment to building new habits.
You may also want to consider hosting events during work hours. Lunch and learn sessions are usually very popular. Work with the vendors and insurance carriers sponsoring your current plans. Employees will note your support and appreciate that you are dedicating the time during the day to help them meet their personal goals.
Thinking outside the box
It’s no secret that financial education can be boring. You will want to drive participation with programs that help employees tackle short-term problems first and then move on to long-term success.
In addition to education about savings, investing and retirement, offer lessons on credit scores and loan consolidation. Employees struggling with debt can be prime targets for fraud. Help them understand what to look for in a solutions provider.
You may also want to remind employees that insurance can add to financial well-being. Employer-sponsored plans like health, dental and vision coverage aren’t often overlooked. But what about disability and life insurance? Both plans can help protect employees and their dependents from financial disaster at minimal cost.
Individual and voluntary options like pet insurance, long-term care, travel insurance and legal expense can all help prevent financial losses as well.
Participation in your company’s retirement plan is another way to help employees realize positive savings behaviour.
Taking your plan to the next level
Financial wellness plans have never been more important. With rising debt and savings rates well below what is recommended, they can make a difference in your employees’ lives.
Encouraging financial literacy and providing the tools for financial planning can help your employees put a strategy in place. It can get them beyond the stress that economic issues may be causing in their lives. And it shows your concern for them outside the workplace.
If you need help with more ideas on how to take your financial wellness plan to the next level, your benefits advisor can help. They have the resources and contacts needed to develop a plan that will engage your employees and provide them with the skills needed to achieve financial success.
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