What is Financial Wellness and Why is it Important?
Financial wellness is a concept that has always been important and is gaining traction in the workplace and beyond.
Financial wellness is a term used to describe several aspects of one’s current financial condition and relationship with money. It can refer to having enough savings or income to live comfortably, as well as the ability to make informed financial decisions.
After all, not everyone knows what they’re doing with their money. And while it’s easy to blame the poor decisions of others—and there are plenty of those to choose from—it’s also necessary to look at yourself and your habits.
The good news is that financial wellness isn’t just about making sure you’re saving enough; it’s about being conscious of your spending and spending patterns so that you can make informed choices about how much money you have and where it goes.
Financial health is about having a strong relationship with money—not just managing it, but understanding its true value, its compounding rate and how you can secure yourself for the future- both short term & long term.
The right financial understanding gives you access to the resources you need to make it through tough times and stay on top of your finances. It’s about having a plan in place that keeps you from falling behind and helps you know what steps to take when things go wrong.
It is a lot like physical fitness—it takes time and effort, but the payoff is huge!
Financial Wellness and Employee Productivity: A Key Correlation
We have identified three main areas in how financial understanding in employees may increase workplace efficiency:
1. Strengthened Employee Recruitment and Retention:
A study published by the National Foundation for Credit Counseling found that financial wellness improves employee retention and recruitment. According to the report, “financial wellness supports strength in numbers. When employees feel confident about managing their money, they are more likely to stick around and take on new responsibilities.”
Additionally, research conducted by Go Banking Rates found that companies offering financial wellness programs experienced an average 3% increase in revenue per employee. The study also found that companies with online banking capabilities saw an increase in customer loyalty of up to 20%.
As the cost of living continues to rise and employers look for ways to retain their workers, there has been an increase in the number of employees who are seeking out financial wellness programs. Financial wellness helps employees feel more engaged and satisfied at work. It also helps them stay loyal to their employers, as well as improve their bottom line.
2. Improves Work Satisfaction:
A study by CareerBuilder found that financial well-being improves employee satisfaction by almost 20%. And, of course, happy employees are more productive, and productive employees are worth more money
So how do you get your employees to care about their finances? Start by helping them understand what they’re spending their money on—and why. Ask questions like: “What purchases do you make with your credit card?” or “Which bills do you pay off each month?” You’ll be surprised by some answers!
Another way to help your employees develop financial education is by making sure they understand what types of financial services are available to them. Not all banks offer the same services, so don’t assume that all banks will have the same services available to them. Instead, ask each one of your employees if they know what kinds of services they can expect from each bank to make an informed decision about which one would best suit their needs.
3. Enhance Employees Productivity:
Financial wellness has been shown to impact employee performance in different ways:
- Financial health affects job satisfaction and improves productivity. Employees who are healthy financially are more likely to be satisfied with their jobs and perform better at work.
- Financial health protects against stress. When employees are in good financial health, they are less affected by external stresses and can better handle them when they arise.
- It promotes positive relationships with coworkers and leads to greater team cohesion. Employees who have good financial health tend to be more engaged with their coworkers and feel more connected as a group.
Financial wellness is a crucial component of economic empowerment and social mobility. The working class is changing, and financial wellness is an important part of that change. Everyone needs to understand the significance of financial health and how to practice it. It is not just about making money—it’s about having a healthy relationship with money so that you can have the freedom to do what you want with your time, your energy, and your resources.