Helping Employees Navigate a New Economy with Financial Wellness

Americans are finding themselves navigating a constantly-changing financial landscape, and COVID-19 brought about even greater economic challenges for many households. The unemployment rate spiked over 10% in reaction to the virus, and millions of Americans cut back on personal spending amid the general uncertainty wrought by the pandemic, according to Deloitte.

Businesses now have a unique opportunity to help their employees navigate this new post-COVID economy through a strengthened focus on financial wellness. Even if your employees have stable employment, after all, they could be supporting a partner or other family who have not fared as well.

Keep reading to learn more about employee financial wellness programs that can improve the lives of your valued team without breaking the bank.

Supporting Financial Literacy

Financial literacy is an understanding of how to manage your personal finances. That includes the knowledge to budget, borrow responsibly and save for the future. However, many schools don’t cover personal finance topics, and often parents teach their kids little about money matters.

Fortunately, employers are in a great position to empower their employees to manage their money better. Financial stress isn’t just detrimental to your employees' health and lifestyle—it also has a negative impact on your bottom line.

According to research from the Society for Human Resources Management, money troubles at home lead to an inability to focus at work for 60% of workers and an increase in absenteeism and tardiness for about one-third of employees, which may harm productivity.

To help alleviate common financial challenges, consider offering workplace education, online courses, in-person seminars and other resources to improve financial knowledge without adding any major costs.

Alleviating the Student Debt Burden

Federal Reserve data indicates that over half of college attendees took on some form of debt to finance their education, with about 20% behind on payments before COVID struck. The Department of Education reports that 42.9 million borrowers owe more than $1.5 trillion, and that doesn’t include private student loans.

Many employers have begun offering student loan repayment assistance programs to help unburden their workers. Aetna, Estee Lauder, LiveNation, and Staples are examples of employers who offer student loan payment assistance.

If you don’t have the budget for student loan payment assistance, financial literacy resources could still prove useful for those with any kind of loans, including student loans. Strong financial literacy resources could help students, parents, and current borrowers make informed decisions around refinancing and repayment plans to avoid and alleviate financial strain.

Navigating Healthcare Costs

Health insurance is a major work benefit for many employees, and that's even more true than ever in the immediate aftermath of the global pandemic that threatened the lives and livelihoods of many workers. The Census found that 92% of Americans had health coverage at some point in 2019, and over half of those get insurance through their employer.

Offering quality and affordable healthcare options to employees is an attractive benefit that may help you bring in and retain the best talent. To help your workers save on taxes, consider adding a health spending account (HSA) or flexible spending account (FSA) benefit to help pay for healthcare and childcare expenses.

These unique accounts encourage employees to pay for future costs through payroll deductions. That means employees can save on taxes while also using an automated savings approach to budget and pay for future healthcare needs.

Combating Financial Fragility

A Federal Reserve study recently found that about 40% of Americans couldn’t pay for a $400 financial emergency from their current savings. And that's a real danger, considering that $400 is far less than many common home or car repairs. Related, CareerBuilder found that 78% of U.S. workers live paycheck to paycheck, and that was before COVID-19 dealt a blow to the economy and many workers' wallets.

When a bill is due and there’s no money in the bank, the risks of not paying can lead to late fees and service disruptions. Or, if someone tries to pay from an account without an adequate balance, they could incur overdraft fees. Regardless, not having adequate savings is an expensive and risky proposition for most individuals.

To help combat this risk, some employers offer payroll advance options or refer employees to apps like PayActiv, which include something similar at no cost to the employer.

In addition, earned wage access programs integrate with employer payroll systems and give employees access to a portion of their paycheck early. If they've worked the hours, they can get a portion of their income a week or more before payday. This can help avoid bank overdrafts, late rent, pay for car repairs, and help employees more easily manage other stressful and costly situations.

Financial Wellness is a Team Effort

Your business can play an important role in helping your employees build a stable financial future. While an employee financial wellness program offers the most direct benefits to workers, improved productivity and loyalty make it a smart investment for employers. Working together can ensure that both your valued team and your business have the tools and resources they need to thrive financially.