November 16, 2020
For a lot of employers, the idea of an employee financial wellness program can be something of an afterthought. That is, beyond providing fair pay and a clear policy regarding taxation and benefits, it can seem unnecessary to take any other action regarding employee finances. What’s becoming more and more apparent, however, is that employers do need to take a more active approach toward implementing employee financial wellness programs.
This is true for one primary, simple reason, which is that data shows work performance is being affected by financial problems for over half of employees. The core problem seems to be that wages are not rising quickly enough to meet the higher costs of living. But this issue is compounded quickly by other factors. Employees are borrowing more money to cover expenses, struggling to manage finances as a result, and ultimately feeling less secure (and in some cases less motivated) in their jobs. As an employer, you can’t solve all of these problems all the time. But developing a strong employee financial wellness program can certainly help, which is why we have some suggestions for what such a program should include.
Clarify Bonus, Promotion & Retirement Plans
One of the first and easiest steps you can take toward improving employee financial wellness is to establish a clearer policy regarding bonuses, promotion structures, benefits, and retirement plans. You may already feel like all of these things are clearly defined in contracts employees sign with your company. But in most cases, they really aren’t covered in clear detail. It’s a relatively simple thing to design a sort of digital booklet each employee can refer to that clearly outlines company policy with regard to all of these areas. It’s still up to the employee to take advantage of the information, but clarity in these areas can be helpful, and can allow any given worker to manage his or her own finances more effectively.
Provide Financial Literacy Education
The idea of teaching financial literacy to working employees can seem almost condescending. But the truth is it shouldn’t be thought of that way, and in fact it can actually be extraordinarily helpful. Research on financial education out of the U.S. indicates that people who learn about personal finance as children are more likely to handle it well as adults. However, as is the case in the U.S., the UK ranks as “below average” in teaching financial literacy. This problem has been cited as one of the reasons personal debt is at such high levels in the UK, and by extension it’s undoubtedly responsible for why many employees are struggling financially.
Thus, providing some basic financial literacy education — on topics like managing credit scores, balancing budgets, personal savings and investment, and so on — can actually be extraordinarily helpful. Just be sure to go about it responsibly, even if that means bringing in an outside professional or a partner business that can educate effectively.
Teach Manageable Investment
A lot of companies provide some basic instruction regarding employee contributions toward employer-aided retirement funds. This is absolutely necessary, but employees can also benefit from further financial education where personal investment is concerned. Many of them may want to maximise their earnings via their own portfolios, but may have trouble figuring out how to do so productively.
It is not your responsibility as an employer to directly assist employees with investment management. What you can do however is educate employees on some methods of investment that they’ll be more likely to be able to manage alongside full-time jobs. For instance, employees who are interested in personal investment but feel they have no time for it might be interested to learn about mutual funds and index funds — both of which can grow largely on their own, with minimal decision-making or management required.
Employees who are more interested in directly controlling their portfolios meanwhile, but who are still concerned about the potential time commitment or cost of doing so, might be interested in some education on contract for difference stock trading. This is a more active process, but its basis on value contracts, rather than day-to-day trades, can make it more manageable with less time. The same could more or less be said of stock trading via futures.
Ultimately it’s not your place as an employer to recommend any of these specific methods, from index trading to CFD trading and so on. However, making employees aware of some of the options they might be able to manage with limited time — and educating them on how those methods work — can be another helpful aspect of teaching financial literacy.
Discuss Work-Related Money Mistakes
Covering common money mistakes is a typical aspect of financial education. Ideally, your aforementioned focus on financial literacy then should include a little bit of discussion about some of the ways in which people tend to mismanage money — from careless purchasing, to latent subscriptions, to mounting debt or poor attention to credit card balances, and so on.
Beyond these basic aspects of money mismanagement though, you can also benefit your employees by discussing some of the ways they can save money with regard to work. This can mean any number of things: suggested commuting options, ways to avoid pricey lunch breaks, how to adhere to a dress code without purchasing a new wardrobe, and so on. Add these concerns up, and a lot of employees actually spend a lot of money simply on performing their day-to-day jobs. But avoiding these money mistakes can result in more savings and security.
Beyond all of these specific ideas — from policy clarity, to investment options, to financial literacy — it is perhaps most important to establish and maintain a culture of openness with regard to finances. This does not mean that employees need to feel comfortable freely discussing their financial standing with one another. But it is wise to make it as natural and comfortable as possible for a struggling employee to go to HR or refer to a financial wellness program with the goal of addressing a specific issue. If employees feel that they’re supported in these areas, they’ll be more likely to manage their finances proactively, and thus more likely to maintain focus and productivity at work.