So, what is financial wellbeing?
Money may not buy happiness; but it does buy freedom. Freedom to make choices about the way you live. Financial wellbeing can be described as an individual’s ability to make confident, well-informed money-related decisions resulting in financial security now and into the future.
Financial wellbeing, or the lack of it, affects everybody. One thing is for sure, without money management skills, any one of us could find ourselves with some very serious problems.
Financial wellbeing is one of the most important aspects of overall wellbeing. A recent NZ study undertaken by CoreData highlights the influence of financial wellbeing on overall wellbeing, with only 6.8% saying financial wellbeing has little to no influence on their overall wellbeing.
What does poor financial wellbeing look like in the workplace?
According to the Society of Human Resource Management, 83% of HR professionals reported that financial stress in employees negatively impacted work performance. Employees’ money worries are having a significant effect on their work and wellbeing.
As we discovered, Australian?s are worrying themselves sick; about money with 39% of people say they spend two or more hours during the working week thinking about their finances.
Reduced productivity and engagement, Increased absence and presenteeism, and an increase in mental health issues, can all be linked to financial concerns. The cost to businesses has been estimated at between 13-17% of payroll.
“It would be naive to expect someone who is sleep deprived, worried and anxious to leave that at the door when going into work. Financial stress manifests in the form of low levels of concentration, lack of motivation and general tiredness which can lead to lower performance, irritable or inappropriate behaviour and increased absenteeism.” Financial Coach Alisa Barcan
Why should we tackle financial wellbeing in the workplace?
“As most of us didn’t receive financial education in school, there is an opportunity for employers to support the development of much needed financial knowledge, skills and behaviours among working-age adults that will have a positive impact on their financial wellbeing,” says Erik Porter, CEO of The Money Charity.
As an employer, you contribute significant amounts of money to compulsory superannuation accounts over the years. Yet without the right financial education, your team could reach retirement age with less than they may be comfortable to retire on, without an understanding of their options or be forced to stay active in the workforce for longer than optimal.
There is very strong evidence that financial education works. A meta-analysis of 126 evaluation studies by Benefex, found that financial education significantly impacts financial behaviour and, to a larger extent, financial literacy.
With little support elsewhere, all eyes are turning to the employer to be the source of financial education.
What are some of the benefits of a workplace financial wellbeing program?
There is a recognition that financial wellbeing initiatives can create long-term value for all stakeholders of an organisation.
According to EY’s ROI of Employee Financial Wellness report, those organisations offering financial wellbeing programs saw a direct correlation to increased employee wellbeing (50%), retention (56%) and productivity (45%).
Research by Zellis found that if offered, 63% of employees said workplace financial education would make them feel more looked after, with a massive 88% saying it would have a positive impact on their personal situation.
Employee’s say financial wellness programs demonstrate that their employers care about them. Around 6 in 10 say they are more committed to their employer, and more productive at work, when their employer demonstrates this commitment. (2018 Prudential American workers survey).
Less stressed employees deliver happier, more satisfied customers.
What are the key inclusions of a great financial wellbeing program?
It?s important to remember that a one-size-fits-all approach may not be appropriate. We are all at different ages and stages in our financial journey with different individual needs and priorities.
Here are our tips for a great financial wellbeing program:
- It is important to consider a program that enhances an employee’s knowledge about a broad range of financial topics and enables them to take the necessary steps for their personal financial wellbeing.
- A successful financial wellbeing program needs to be broad and continuous, to enable individuals to access solutions when and where they are needed.
- Assess your requirements (gather feedback from your team).
- Tailor communication – the programs achieving take-up are well-communicated and encourage on-going interaction and participation.
- Make the program available to be accessed whenever and wherever needed.
- Keep it private. Your employees will be seeking assurance that what they access and learn is confidential.
- Assess uptake and progress. Ensure you review this employee benefit like you would any other, so you are assessing the benefit to your employees on an ongoing basis.
The aim is to help you reduce financial stress, increase confidence in money management, and build a better financial future; for you, your team, and your organisation.
Lyndal Higgins, Money101
At Money101, we believe everyone should be empowered to make better financial decisions. This is our passion, and everything we do evolves around this.
We’ve been in creating online financial education solutions since 2004 for Government, financial institutions, corporates, Super funds and industry associations.
Financial Wellbeing by Money101 is designed to empower Australians to make better financial decisions, a workplace solution delivered online, anytime on any device.