When people talk about “wellness”, there are often several pieces to this, as in a pie graph. Usually agreed upon are the social, financial, career, physical and community, as cited in Rath & Harter’s Wellbeing: The Five Essential Elements. Employee engagement has come a long way over the years. It has helped people lose weight, eat healthier, and be more active. We have worksite initiatives to educate about and help people change their habits on nutrition and exercise, ways to get more involved in the community, and support through Employee Assistance Programs (which are underutilized, but that’s another discussion) to address various personal issues. Do you see what piece is missing from above? Financial wellbeing.
This term could be seen as just another buzzword in our culture obsessed with trends, or it could be a real next big thing. I believe it will be the latter. Think for a second of all the problems people have that revolve around money: stress, stress, and stress. Stress is one of the greatest causes for chronic disease, and chronic disease is one of the largest contributors to early death. According to the American Institute of Stress, a part of the American Psychological Association, money is the second largest cause of stress. Research shows that stress can contribute to the development of major illnesses, such as heart disease, depression and obesity.
Here’s a quick scenario of how financial wellness is related to the other areas of wellness: If someone does not know how to make a basic budget and manage their personal finances well, they may the need to work more hours (resulting in less sleep, adding to stress), rack up credit card debt (resulting in less money, and more stress), will not have as much time for a social life, and may not feel they make enough money to be able to afford healthy foods. If they do not make healthy food choices, over time this can lead to the development of chronic diseases, such as diabetes and obesity. As you can see, trouble in managing one’s finances can easily lead to compounding problems that affect each another.
Currently, most of companies’ financial literacy education comes in the form of an annual company-wide 401(k) explanation and enrollment. While it is a nice idea to offer a retirement plan, most of your employees are in debt to some extent, and it only reminds them that they have no money to contribute to said plan. If they can be helped to get out of debt, develop a budget, and manage their money, which will benefit the employee in the short term as well as long-term. Between Americans’ overwhelming consumer and student loan debt, I think we will see more companies using a more holistic approach in the near future to address their employees’ personal finance issues.