Financial well-being is really picking up steam among the youngest generation in the workforce. According to the TIAA 2022 Financial Wellness Survey, 65% of Generation Z workers believe employers should help them improve their financial wellness. How can employers accomplish this?
First things first: Employers need to start having difficult conversations about financial well-being. Otherwise, they won’t have the insight they need to provide employees with the resources that will make the biggest difference in their financial lives. Here are three conversations employers need to prioritize.
Conversation #1: On Financial Literacy
Many employers assume that their employees have a strong handle on their finances, but the opposite is true: There’s a major knowledge gap in the U.S. workforce when it comes to money. The Harris Poll found that less than 50% of the general population has a budget in place, and fewer than one-third of employees have a detailed plan for managing each paycheck. What’s missing here? Financial literacy.
Financial literacy is a crucial aspect of personal and professional success, and it’s necessary to establish sound financial behavior. However, merely providing financial education won’t drive lasting behavioral change. Such change can be difficult and time-consuming, but it’s essential for helping people achieve financial success.
What can employers do? They can build on employees’ internal motivation to make long-term behavioral changes. For example, employers can offer individual or group coaching to help employees create personalized action plans to make progress toward their goals. Such initiatives enable employees to find solutions to their financial challenges, feel supported, and foster a sense of accomplishment that can help them stay motivated.
Conversation #2: On Retirement
More than half (55%) of Americans feel they’re falling behind on retirement savings, according to a Bankrate survey. Creating a 401(k) program isn’t enough to help employees reach their retirement goals. While a 401(k) — particularly one with an employer match — is a great start, employers must find additional ways to help workers find long-term financial security.
Employers need to think about more than directly saving for retirement if they want to help their employees make progress. Notably, employers should examine the barriers employees face when trying to save for retirement. For example, look at offering a student loan repayment assistance program. If employees are struggling to pay down student loan debt, they aren’t contributing as much to their retirement savings as they could be. Start honest conversations with employees about why they aren’t saving more for retirement – and how employers can lend a helping hand.
Conversation #3: On Financial Stress
Financial stress can take a major toll on employees — 49% of financially stressed employees reported suffering a “severe or major” negative impact on their mental health during the past year, according to the 2022 PwC Employee Financial Wellness Survey. Feeling stress about money can lead to reduced productivity, absenteeism, and higher rates of burnout.
The key for employers is addressing the root cause of financial stress, not just treating the symptoms. While employers can’t necessarily step in and eliminate an employee’s financial stress, they can extend helpful resources, such as financial coaching. Coaching provides a safe space for employees to discuss their money concerns and receive the support they need. With coaching in place, employees can plan to optimize their finances, improve their financial well-being, and reduce their financial stress.
Addressing employee financial stress makes for a healthier work environment, but it can also positively impact the company’s bottom line. Investing in financial coaching can be a significant upsell for employers by reducing turnover costs and improving the workforce’s financial stability, morale and, ultimately, productivity.
Want to learn more about financial coaching for your team? Schedule a demo with Questis today!