What is Financial Wellness (And Why is it Important)?

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Payactiv The Leader in Earned Wage Access.

Monday, August 9, 2021

As the physical and mental wellbeing of employees becomes increasingly important for businesses, many are starting to pay more attention to financial wellness, too.

Article 6 Minutes
What is Financial Wellness (And Why is it Important)?

There have been numerous studies, including The Value of Worker Well-Being from Sage Journals, that show employees are more likely to be positive and perform well when they are in optimal health, both physically and mentally.

Because of this, employee wellbeing has become a huge focus for organizations over the last decade or so.

In fact, a study from Future Workplace found that over two-thirds (68%) of HR leaders rated employee wellness and mental health as a top priority for their business.

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But what do we mean by employee wellness?

Generally speaking, wellness is understood as regularly practicing healthy habits to attain better physical and mental health.

When applied to the workplace, employee wellness encompasses all aspects of working life, from their physical health and safety to the workplace culture, environment, and how they feel about their daily tasks, colleagues, and the company as a whole.

Something that has also come to light in recent years is the importance of financial wellness.

But what is this, and why should your organization care?

What is financial wellness?

Based on what we already know about wellness, it stands to reason that financial wellness means having access to earning, spending, saving and budgeting tools when you need them to build lasting financial strength and stability.

What’s more, financial wellness encompasses several aspects of your fiscal considerations, including financial security, planning for the future, access to advice and information, and spending within one’s budget/means.

And although financial wellness was once something we only really thought about at home, the concept is now making its way into the workplace and becoming another key part of the overall wellbeing of employees.

That being said, it’s a relatively new concept to lots of organizations and their HR teams which is why this hasn’t been widely embraced yet. However, times are changing, and more companies need to make financial wellness an integral part of their culture.

Why is financial wellness important?

Supporting the financial (and overall) wellbeing of your employees is not just good for them, but for the overall success of the business.

This is because poor financial wellbeing can have a number of negative effects on workers and, as a result, the workforce.

If you’re not sure how embracing financial wellness can positively impact your organization, this list is for you. The five key reasons that financial wellbeing is so important for your business include:

1. Reducing stress

First and foremost, financial worries can seriously harm employees, causing them to feel stressed. This, in turn, can lead to them becoming agitated, withdrawn, and far less focused on their work.

Therefore, it stands to reason that you don’t want your workforce to be stressed about money.

By implementing a financial wellness program, you can reduce stress in workers, helping them to feel more positive and productive.

2. Reducing absenteeism

Following on from this, stress can be one of the leading causes of absenteeism in workers. In fact, it frequently tops the list of the most common causes of long-term absence from the workplace.

So, by reducing money worries and stress amongst your employees, this can reduce the rates of absenteeism and employees taking sick days due to their poor mental health.

3. Enhancing the employee experience

A staggering 87% of employees expect their employer to support them in balancing work and personal commitments - and this includes their finances. As a result, two-thirds (67%) want more financial wellness support from the company they work for.

And in order to offer the best possible employee experience, organizations need to do all they can to meet the expectations of the workforce and support their wellbeing as much as possible.

As a result, embracing financial wellness and making this an integral part of the organization’s overall wellbeing program means that employers can create a happier workforce and provide a better employee experience.

4. Creating an engaged workforce

Not only does financial wellness create a better employee experience, but it can also raise levels of employee engagement too. And we don’t need to tell you why a more engaged workforce is better for business!

This is because financially stable employees are more likely to be productive and engaged with their work. With less on their mind, they can focus all their efforts on work during the day, rather than worrying about money. On top of this, they will be more inclined to go the extra mile for a company that’s supporting them through financial wellness programs and initiatives.

5. Attracting new recruits

Finally, organizations that invest in financial wellness (and other wellbeing programs) are going to be more appealing places to work. By offering a full and varied range of benefits, you will, of course, make your existing workers happy, but your company will also look more attractive to prospective employees.

You might also find that your current workers are more likely to leave great online reviews or recommend your organization to their connections. This will make it easier for you to find and hire the top talent when recruiting new employees.

Embracing financial wellness in your organization

Now that you understand the importance of financial wellness; you might be considering the best way to implement financial wellness programs in your organization.

As with any other wellbeing program, it’s vital that you create a holistic approach to financial wellness. This means several things:

  • Nurturing a culture of good communication where employees feel they can talk to their colleagues, managers and senior staff when they need to
  • Ensuring employees have access to all the financial advice and information they need
  • Offering education around financial planning and management
  • Providing more options for employees to take control of their finances using tools such as Earned Wage Access. Tools like EWA help workers to tackle their day-to-day finances without worry, reduce their stress levels and help them to feel more positive and productive
  • Considering benefits such as staff discounts, free meals (or snacks) or bonuses

But of course, this list is by no means exhaustive.

You should also find out if there are any other ways your organization can better support employees by speaking to them directly and getting a better understanding of what they do and don’t want in terms of financial wellness support.

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Payactiv is the best way for employees to get financial relief between paychecks, a service needed by two-thirds of the workforce. We give businesses the tools essential to ease the financial stress of their employees and build a higher performing workforce.

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