Employee financial wellness programs show life-changing results

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(Photo: Bagotaj / Adobe Stock)

Employers are realizing that financially healthy employees are healthier and more productive, miss less work, and experience greater job satisfaction.

Employees in good financial health should have minimal financial stress, overall financial stability, and the ability to retire on time.

Providing employees with personalized financial wellness tools and information can lead to these life-changing results:

1. Increase in credit scores

Financial Well-Being Behavior Change Data: A 12-Month Study found that credit scores increased an average of 25.51 points for our financial well-being users after 15 months.

It is important to have a good credit rating when purchasing a home or other expensive items. According to the data found on the BankRate mortgage calculator at the time of this article, there were no home loans available for people with a credit score below 620.

The interest rates are lower for those with a higher credit rating. A person with a credit score of 657 could get a 30 year fixed rate mortgage at 3.48%. For a loan of $ 270,000, your employee would pay $ 435,387 over the loan. However, if this employee had increased his credit score by 25 points, he could get the same loan at 2.87%, saving more than $ 32,000.

More importantly, higher credit scores have also been linked to better well-being, as shown by a to study by Harvard Business School.

The Harvard study said that “credit scores predicted life satisfaction even after controlling for a range of financial covariates including income, spending, savings, debt and home ownership. to the property. Respondents with higher credit scores felt more optimistic about their future, promoting 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 may plausibly increase welfare, either directly or indirectly, meaning that interventions to improve creditworthiness could improve consumer welfare.

2. Greater job satisfaction

A 2019 MetLife report, Financial wellness programs promote prosperityworkforce, found that a majority of employees believe 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, more committed to their employer’s goals, and more productive.

The MetLife study found that employees who were financially on track were more likely to join the company a year later than employees who were not. The PwC 2021 Employee Financial Well-Being Survey found that nearly three in four employees suffering from increased financial stress as a result of the pandemic would consider working at a company that cares about their financial well-being. The same PwC survey found that employees use and enjoy financial wellness programs when offered. Of those who have access to financial wellness programs, 88 percent participated in the program.

More satisfied employees mean higher retention, which is important to the bottom line of the business. The costs associated with staff turnover are significant. The Society for Human Resource Management reports that turnover costs are equal to six to nine months of the replaced employee’s salary, the number being even higher for executives.

3. Increase in retirement savings

The Financial Well-Being Behavior Change Study found that over a one-year period, 15% more employees started participating in the company’s 401k plan and an additional 10% started participating at the level required to receive the matching ‘business.

Increasing retirement savings is essential for both employees and employers. According to the Magnify Money 2021 Retirement Statistics Guide.

  • The average American household has just over $ 255,000 in their retirement accounts, which is not enough to pay for health care expenses during retirement
  • 49% of U.S. households have no type of retirement account
  • Almost a third of Americans with a retirement account have withdrawn money from the account due to COVID, and nearly half have stopped their contributions.
  • 74% of employees plan to continue working after retirement age

Prudential’s 2019 Cost of Deferred Retirement Study found that when employees delay retirement, employers experience increased costs and decreased productivity. Prudential quantified the cost at $ 50,000 per employee per year for a one-year delay in retirement, and even higher costs for delays beyond two years.

4. Decreased financial stress

Employees are looking for ways to reduce financial stress levels, especially since the onset of COVID-19. Enrich’s data revealed that after one year, participants’ average level of financial stress decreased by 23 percent.

9 from PwCe The annual Employee Financial Well-Being Survey (2020) found that the number one cause of stress for employees was financial matters, which were higher than all other stressors combined. Unfortunately for organizations, half of employees who suffer from financial stress have been distracted by their finances at work, compared to just 12% of those who do not suffer from financial stress. This is why reducing employee financial stress is imperative for employers.

5. Improved health

The National Institutes of Health have discovered a direct link between financial stress and well-being. 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
  • Arterial hypertension
  • Insomnia
  • Psoriasis
  • Substance abuse

By helping employees reduce their financial stress, you are also helping them improve their physical well-being, which in turn lowers health care costs.

6. Increase in emergency savings

A recent Bankrate study found that 61% of Americans couldn’t afford an emergency expense of $ 1,000. However, data on behavioral change in financial well-being shows that among participants using the Enrich Financial Well-Being program, 27% set up an emergency savings fund.

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

7. Improved debt management

A US Federal Reserve report shows that three in four U.S. households are in debt, and the Federal Reserve Bank of New York’s Household Debt and Credit Report (Q2 2021) shows that household debt has reached $ 14.96 trillion. Of that amount, $ 4.19 trillion is in non-housing debt, such as automobiles, credit cards and student loans.

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

  • 28% more pay their credit card every month
  • Average number of current account overdrafts per month decreased by 40.7 percent
  • 32% more on track with their financial goals

8. Increased awareness of other employee benefits

Forty-three percent of employers think their employees don’t know or understand all of the benefits available to them, according to an October 2020 report from Group Risk Development. With businesses investing significant time, energy, and money into these benefits, it is important to effectively communicate the availability and value of these benefits.

Kris alban is executive vice president of Enrich financial well-being.


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