What You Need to Know About Employee Financial Wellness
What Is Employee Financial Wellness?
Employee financial wellness is an employee’s ability to effectively manage their finances. The best way to make good financial decisions is to be prepared for emergencies, spend within means, plan for the future, and utilize available financial tools and information.
Why is Employee Financial Wellness Important?
A company’s most important investment is its workforce, so the financial wellness of employees directly affects its bottom line.
73%
of Americans rank finances as the No.1 stress in life, according to a CNBC poll.1
According to research published by Stress.org:
- More than 50% of workers are not engaged at work because of stress2
- 1 million employees miss work every day because of stress3
- 41% less productive
- 33% less engaged
- 14% more absent
Having control over finances and being able to make different choices is vital to employee well-being, motivation, productivity, and loyalty.
How to Improve Employee Financial Wellness
Although employers can’t completely eradicate stress from their employees’ lives, they can help alleviate financial stress and improve employee financial wellness.
Employers can offer financial wellness benefits that encourage employees to keep track of earnings and expenses, pay bills on time, save easily, budget for the future, gain financial knowledge, and more.
Good financial wellness is essential to achieving financial well-being
There are two types of financial wellness benefits: traditional and modern.
Most Common Employee Financial Wellness Program
Employee financial wellness programs are nothing new and have been offered to employees for decades. There are plenty of companies and services that help improve financial wellness in employees.
Types of financial wellness programs
- Personalized financial counseling
- Financial education courses
- Debt reduction programs
- Support groups
- And more
Traditional Employee Financial Wellness Benefits
In addition to programs, most employees expect traditional benefits like healthcare and 401(k)s, but there are also other programs and benefits that can be beneficial.
Ongoing Financial Education
Offering educational courses is an effective way to improve employee financial wellness. A wealth of free and paid resources is available to you, and choosing the right program depends on your needs and those of your staff. To get the best business outcomes, you want to have the most productive and motivated staff, and to do that, you need to address their specific financial needs.
That’s why the first step to offering financial courses is asking your staff what they want. There’s no one-size-fits-all when it comes to financial education, so the more specific you can be, the more your employees will appreciate you.
Financial education course ideas
- Best methods for repaying student loans
- Homebuyer programs specific to your city/state
- Breaking down the top retirement tools
But just making the curriculum available isn’t enough, you have to take into account the time, energy, desire and more needed to learn.
Few employees want to take a financial education class when they get home from work, and offering classes during work hours compromises learning as employees multitask and get distracted.
Look to gamification strategies to encourage putting all this education to good use. With personalized educational programs, you can segment your employees by progress. Then give them at-home or at-desk assignments, like switching to a fee-free bank or spending 10 minutes every day fine-tuning their budget or opening a savings account for emergency funds.
Segmenting is important for another reason. The financial concerns of employees in their 20s are very different from the financial concerns of employees in their 50s. A high-school age or 20-something employee will be more receptive to lessons on car financing, student loans and savings goals like emergency and vacation funds, but they might be less interested in the nuances of retirement and mortgages.
By offering the time, motivation and encouragement to transfer financial information to financial empowerment, you can create a culture that is open about the practice of money management. By focusing your work culture on financial literacy, your employees will learn the importance of being money smart.
Student Loan Aid
About 48 million Americans are saddled with student loan debt, equaling nearly $1.75 trillion. Loan-repayment programs are gaining in popularity, especially where companies are on the hunt for high-demand skills.
Types of Employer Student Loan Aid
- CARES Act: Allows employers to make tax-exempt student loan repayments up to $5,250 annually
- Benefits Swap: Allows employees to swap traditional benefits for loan repayments
- 401(k) Match: Allows employers to make 401(k) contributions equal to student loan payments
A company that wants to remain competitive on the job market should consider student loan aid, but even if you do, it may not be enough to reach every employee. Many of your employees may not have any student loans, but they may still need help improving their financial wellness.
Financial Planning Services and Online Tools
Make financial wellness a priority. Companies like LearnVest and HelloWallet offer services that help employees better manage and save their money. Programs like these can add another layer of personalization by addressing particular financial concerns, like paying for college or saving for retirement or home purchase.
Next-generation 401(k)
It’s old news to offer a 401(k) with an employer matching a percentage of an employee’s contribution. What’s new is automatic enrollment, but it’s starting to be more common, as is automated escalation, in which an employee’s savings rate is annually bumped incrementally by one or two percentage points.
However, this benefit doesn’t accommodate every financial situation, and an opt-out should be offered at time of onboarding and at any point of employment.
Modern Employee Financial Wellness Benefits
Everybody’s financial situation is different, so traditional programs like 401(k)s don’t benefit everyone equally. Offering customizable benefits is the most effective and fair way to improve financial wellness for all employees. Financial wellness benefits that are personalized and different for each employee are the most useful in today’s rapidly changing society. Here are some personalized financial wellness benefits employees like.
Full Earnings Transparency
With work notions changing over the past few years, more and more employees are feeling empowered to take more control over their earnings, and one way to do that is by having full transparency into earnings.
It is important for employees to know how much money they earn in order to achieve financial well-being. Despite what seems obvious, most employees don’t know how much money they’ve earned until they receive their paycheck, and in order to calculate exactly how much money they earned per day or per shift, they have to divide the total by the number of hours they worked and take into account taxes, withholdings, and more. By giving employees a simple way to track their earnings per shift, you can build trust and help employees feel more confident about their finances.
On-demand Pay
A salary raise can’t solve everyone’s financial problems, but it is possible to pay them frequently enough to solve some.
On-demand pay tools allow employees to get their earned pay whenever they want, without having to wait for payday. The best on-demand pay providers allow employees to get paid without making them pay a fee, and they’ll allow employees to access 100% of their earned pay.
60%
of Americans are reported to be living paycheck to paycheck.4
Real-time Rewards
Employee recognition programs are nothing new, but they’re either unwieldy, costly and unmotivating. When employees are instantly recognized for their work, it’s easier for them to associate winning work behavior with a reward, motivating them to be more productive.
The option of adding a bonus to your employee’s next paycheck, or even giving him or her a gift card, both have pros and cons. The most effective employee recognition tools allow employers to instantly give employees digital cash rewards without having to do any extra work regarding taxes or payroll. You can even find tools that allow you to empower regional managers to reward local teams with full autonomy.
Simple Savings Tools
When it comes to Millennials – the largest generation in the U.S. labor force in a Harris Poll commissioned by DailyPay, Funding Our Future and The Center for Financial Security at the University of Wisconsin – 44% say they have either no savings (17%) or not enough savings (27%) to cover a $400 emergency expense.5 When it comes to all Americans, 87% of employed Americans say it is at least somewhat important that their employer offers a retirement savings program, such as a 401(k) account.6
Needless to say, Americans think it’s important to save money, and they expect their employers to help them do so. This means offering traditional programs like 401(k)’s and IRA accounts, but also offering simple, no-frills ways to save. Not every employee has the resources needed to learn how to most effectively fund a 401(k), Roth IRA, HSA or any of the other traditional savings tools usually available to employees. But every employee understands the concept of setting aside 10% from each paycheck for a rainy-day fund, they just need simple tools that allow them to save, like DailyPay’s multiple saving features that allow employees to set aside cash in just a tap.
What Happens When Employees Improve Their Financial Wellness
DailyPay was created to help employers offer modern financial wellness benefits to their employees, and help employees improve their financial wellness. We’ve done the research, and here are the effects of helping employees improve their financial wellness with DailyPay.
$1,205
DailyPay saves employees an average of $1,205 per year in reduced fees from loans, overdraft and late fees.
- 47% of users say DailyPay has helped them avoid taking out a payday loan
- 49% of users say DailyPay helps them avoid late fees or overdraft fees
- 48% of Daily users say DailyPay helps them plan for the future and pay their regular bills on time
- 30% of users say DailyPay helps them gain better control of their finances
67%
of users say DailyPay has helped them reduce financial stress.
- 52% of users say their opinion of their employer has improved since they began using DailyPay
- 77% of users surveyed by Mercator Advisory Group said that DailyPay’s on-demand pay benefit helps them save money by avoiding other more expensive alternatives to handle expenses
- 90% of users surveyed by Mercator Advisory Group reported improvement or elimination of reliance on legacy financial alternatives like overdraft fees, payday loans and late fees
- 46% DailyPay users say it has helped them to save more
- 81% of DailyPay users stopped using payday loans or reduced their use (15%). 88% of those who stopped or reduced their use credited DailyPay for this change
- 79% of DailyPay users rarely/never overdraw their account, or overdraw on their account less often than before they had DailyPay (18%)
88%
of DailyPay users have less trouble with bills and loan payments now than they did before using DailyPay. 94% credit DailyPay for this change
Improving Employee Financial Wellness
Employee financial wellness is an employee’s ability to effectively manage their finances. That means being financially prepared for emergencies, spending within their means, planning for the future and having access to the tools and information needed to make good financial decisions.
A company’s most important investment is its workforce, so the financial wellness of employees directly affects its bottom line. Employees who have control over their finances and can make are happy, healthy, motivated, productive and loyal.
Employers have the power and the responsibility to help employees improve their financial wellness. The most effective way to do so is to first ask your employees what they need help with financially, and then offer a mix of traditional and modern financial wellness benefits that will reach all employees at your company. To best support your employees, customizable and personal financial wellness benefits are essential. Cookie cutter programs won’t reach every employee and there’s no one-size-fits-all when it comes to personal financial wellness.
Learn how to get started with a modern, customizable financial wellness benefit.
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All information herein is for educational purposes only and should not be relied upon for any other use. The information herein does not constitute the rendering of professional advice by DailyPay. DailyPay does not warrant the completeness or accuracy of any information provided to you.
Frequently Asked Questions
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What is employee engagement?
Employee engagement relates to an employee’s commitment to and connection to a company. Learn more about employee engagement.
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What do I do if my employee engagement is low and how can I improve employee engagement?
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What are the benefits of increasing employee engagement?
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How do you measure employee engagement?
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What are employee engagement platforms?
See Why Top Companies Choose DailyPay
Greater financial control with access up to 100% of their DailyPay balance to meet the challenges of unexpected financial disruptions.
Improved planning with visibility to spending and earned pay in one easy-to-use app.
No need for a pre-existing checking or savings account.
Minimal change to payroll processes — DailyPay handles it all.
Seamless integration with HCM, payroll, banking and benefit applications.
Enterprise-grade platform that keeps data private and the service running so it's always there when your employees need it.