Every company has employee wellness on the mind. As a result, employers are increasingly investing resources into making sure their workers are physically, mentally, and emotionally taken care of so they can produce their best work. But there’s another type of wellness that has historically been overlooked but is becoming a bigger part of the conversation: financial wellbeing.
In this post, we’ll explore why financial wellness is such a critical component of overall wellbeing. We’ll also share five actionable steps you can take to improve financial wellbeing for your own employees.
What is financial wellbeing, and why is it important?
The Australian Securities and Investment Commission (ASIC) surveyed the general public to gauge their thoughts on financial wellness. The results informed a collective definition of financial wellbeing, which we shared below:
“Financial wellbeing is when a person is able to meet expenses and has some money left over, is in control of their finances and feels financially secure, now and in the future.”
Why is this idea of financial wellness so important? To understand the impact, we need to take a look at how a lack of financial wellbeing affects individuals. This report from AMP paints a picture of how an unstable financial situation can negatively impact employees:
- There are currently 2.44 million Australians suffering from financial stress
- In the workplace, this results in two in five Australian workers experiencing financial stress during their careers – with nearly half feeling financially stressed for an average of six and a half years or more
- Employees troubled by their financial circumstances take an extra 2.4 sick days per year and spend almost an hour per week dealing with money problems at work
- This financial stress costs Australian businesses an estimated $31.1 billion per year in lost revenue
Looking at these statistics, it’s clear that financial wellbeing (or a lack of) can have a significant effect on productivity, absenteeism, revenue, and more.
5 Ways to improve financial wellbeing
The good news is that there are ways for organisations to improve the financial wellbeing of their employees. Below, we outlined five recommendations to help your employees feel more in control of their financial situations.
1. Know your workforce
Taking a one-size-fits-all approach to financial wellness isn’t effective. To truly make a difference in the life of your employees, you have to know your workforce and understand their needs. Employee satisfaction surveys are a great way to uncover this information. For instance, let’s say that your survey reveals that the majority of your workforce can comfortably afford basic expenses with their existing salary. But what they struggle with is saving enough money for future milestones like buying a house or starting a family.
In this situation, you may not want to invest all your resources into giving people more raises. Instead, you want to focus on getting your employees the tools and training they need to learn how to manage their money better. This example demonstrates why it’s critical to know your workforce instead of making assumptions.
2. Provide financial education
Education is the most powerful tool when it comes to finances. Unfortunately, most of us have never received a formal education around important life skills like money management and saving for retirement. That’s why many people feel lost and overwhelmed when it comes to these topics.
HR leaders have an opportunity to step in and help fill in these gaps in knowledge. You can connect employees to resources – such as online courses or training led by professionals – that cover key financial topics. Similarly, you can also cover the cost of financial counseling for your employees and their partners. These various forms of education are a great way for workers to ask questions, make a long-term plan, and receive support around their financial goals.
3. Encourage positive financial habits
Habits don’t develop overnight. They require daily, consistent practice to eventually take hold and make an impact on someone’s life. Given that we spend most of our waking hours at work, it only makes sense that many of our financial habits be developed in the workplace.
But how exactly do you encourage your employees to develop positive financial habits? The best way is to show them by example. One way to do this is by making additional superannuation contributions to their accounts. By doing so, you’re demonstrating that you want to invest in their financial futures, and watching their accounts grow over time can motivate employees to make their own contributions. Make sure your workers also know that they can make personal super contributions during a financial year. This is a great way to reinforce good saving habits.
4. Destigmitise conversations about finances
Historically, money was a taboo topic – especially in the workplace. Unfortunately, this stigma creates barriers when it comes to employees taking control of their financial health. If they don’t feel comfortable going to their HR team to ask questions about their salaries or financial benefits, then who can they turn to? Companies should strive to overcome these stigmas and encourage a culture where it’s ok to discuss financial topics.
As HR leaders, there are a number of things you can do to make this a more widely accepted topic: host conversations about the most frequently asked financial questions by your employees; Train managers on how to have transparent conversations about things like salaries and raises; Host open office hours where people can come ask questions. The more you can normalise the conversation about finances, the more empowered your employees will feel to learn more about the subject.
5. Create equal opportunities for success
Finally, it’s important to create equal opportunities for success within your organisation. What exactly do we mean by this? This means being able to take a step back and gauge whether everyone at your company has the same ability to get promoted, receive a raise, and take advantage of the benefits that are offered to them.
For instance, if you were to run an analysis on salaries across the board, would you find any discrepancies with regard to gender or race? If so, this is problematic because you’re lowering the chances of a specific group receiving a pay raise – something that could make a huge difference to their financial health. Another example: are you communicating your financial benefits in a way that’s accessible to all employees? If you have workers in manufacturing or are outside the corporate office, chances are that email and Slack won’t be their primary form of communication. So if you’re only talking about benefits in those channels, you risk having an entire segment of your workforce be unaware of the financial help you offer.
Your employee’s financial wellbeing can have a huge impact on other aspects of their health, as well as their performance at work. By investing in their financial futures, you’re not only helping reduce a significant burden in their lives, but you’re also helping the success of your business.
If you have any employees who are in need of support, be sure to check out Wellness@Work, a free hub designed to support HR and Australian workers by giving them access to free content.