Financial wellness

What is Financial Wellness?

Financial wellness (or financial wellbeing) refers to a person’s overall financial health and the absence of money-related stress. It’s the result of successful expense management. 

Financial wellness is an important part of overall employee well-being which consists of physical, mental, and financial wellness. 

In very simple terms, financial wellness means the art of efficiently and successfully managing one’s economic life. Financial wellness is a combination of knowledge about your finances, making good financial decisions, and consolidating financial decisions into other important aspects of your life. Moreover, financial wellness means the capability of managing efficiently the short term finances and making preparations for achieving long-term goals simultaneously. Money plays a very important role in our lives and it has to be managed in a very wise manner.

How do you manage Financial Wellness?

If you are having trouble with financial wellness, look for tools and education to help you develop a healthier relationship with your finances. Depending on your situation, this may involve attending financial seminars, using budgeting apps, or working with a financial professional. Ultimately, to help you pursue financial wellness, you should consider bringing the following elements together:

  • Earning a sustainable income
  • Getting control over your day-to-day and month-to-month expenses
  • Creating and maintaining effective money management strategies
  • Setting up a savings account for financial emergencies
  • Outlining long-term financial goals
  • Saving for your long-term financial goals

Advantages of a Financial Wellness

  1. Improved Employee Productivity

One of the top advantages that you will get is that there will be an increase in employee productivity. A financial program needs to offer-

  • Budget counseling
  • Debt reduction programs
  • Student loan support

This will also help to reduce personal financial hardships. Financial wellness programs save employees time from concerns over debts and many worries.

  1. Increase in Employee Satisfaction

Employees have reported greater professional satisfaction when they have access to financial programs. Programs that let them set and achieve individual financial goals. It includes contributing to an investment plan, building an emergency fund, and much more.

An employee prepared for unexpected financial emergencies is more engaged at work. It is because they do not have to worry about their finances in the long term.

  1. Greater Employee Retention

With the help of the financial wellness program, you are more likely to offer employee perks that help them stabilize their money. This will not only help them in the long run but will also help you in retaining your prized assets.

Employees are more likely to stay in your organization if they see that they will have a more significant helping hand with their finances. This increases retention and improves your company culture as well.

  1. Strong Employee Recruitment

In the present era, the competition is high, and job-hopping a common trend. To reduce this, employers have to provide all the benefits and perks to keep their best talents.

Benefits like health insurance provide a strong sense of stability for the employees.

For a strong recruitment strategy, you need to provide support to employees’ finances. This, in turn, makes the millennials feel valued in the organization. Thus, leading to higher chances of recruitment in your company.

4 Steps for launching a Financial Wellness Program

  1. Concentrate on your Human-Resources Plan

A workplace financial wellness programme may be a strong tool to help you reach your organization’s strategic goals because financial stress can affect employee performance and job happiness. Consider implementing a financial wellness programme as part of your human resources strategy to address one of the fundamental causes of employee stress, which can manifest itself as decreased productivity, poorer employee morale, or a higher turnover rate. Everything from staff messaging to a delivery method will be guided by a clear understanding of what you want to achieve.

  1. Provide Engaging Tools

Attention spans are short, and time is tight. Give employees actionable, useful resources such as checklists, timelines, FAQs and tip sheets. Bundle information into annual enrollment, but also send reminders throughout the year. Consider contests, quizzes and fun live or virtual events to bring financial wellness topics and resources to life. Leverage internal resources such as marketing, social media and communications teams and employee resource groups.

  1. Set specific Goals and Measure it

Share your goals with your employees and how you came up with them. Tell them you’ll be checking in to measure progress and get feedback. If people feel that they are part of something bigger than themselves, they might be more incentivized to be engaged. Note that their individual work on financial wellness helps your organization thrive and grow stronger, as employees feel more empowered and in control of their financial life.

  1. Create Measurements and track your Progress

The same procedures that were used to establish employee needs may be utilised to assess the performance of your programme.  Increasing involvement in retirement programmes, usage of flexible healthcare spending accounts, or attendance at various training sessions, for example, can all be indicators of increased risk. Remember that the most effective financial wellness programmes are those that modify both money attitudes and everyday actions in order to have a long-term impact.

Employers should also evaluate their performance in terms of their internal objectives. Employee happiness is the most popular indicator, but to determine a genuine return on investment, more particular measurements should be devised based on your unique HR objectives, such as competitiveness, retention, and employer branding.

Ways to ensure Financial Wellness

  1. When reality changes, tweak Investments accordingly

If you still have not made peace with the fact that each day we’re inching closer to a recession, high time you do. This implies a future liquidity crunch coupled with high inflationary pressures. Investors are almost always advised to take a long-term view but in this situation, it is equally important to set up short-term financial goals. Investment decisions during this period should be made keeping in mind your short-term goals. The investments should be adequately liquid to address contingencies and short-term needs.

​2. Study your Financial Records closely

Here are some tasks you need to prioritize and work towards:

  • Create a will to ascertain the rightful owners of your assets
  • Prepare a balance sheet with your assets/liabilities, share it with someone you trust
  • Appoint nominees for all your investments/bank deposits
  • Keep your life and medical insurance policies handy and readily available. Share the details with immediate family members
  • Take stock of all your loans, existing EMIs and create a backup plan to service the debt

Your financial plan should incorporate these above-mentioned tasks. Ensure that your financial documents are appropriately managed and documented. Moreover, your financial assets should come to your rescue, should the need for immediate funds arise.

​3. Create a Backup Plan

Fear you are next in line to a salary cut or job loss? Introspect and create a contingency plan to tackle this mishap. Re-evaluate your financial standing and capacity to service debts along with meeting necessary expenses. Investments could be redirected to liquid assets to avoid a sudden cash crunch and the risk of being a financial defaulter. We often forget that such situations can strike anytime and entrap anyone, even us. Hence everyone needs backup. So keep a plan B ready to ensure a regular income stream.