Financial Wellness Programs: A Benefit For Your Employees and Your Business

Your employees don’t leave their goals or their worries at the door when they come to work. For today’s workforce, those concerns–from small distractions like a traffic jam to big wins like a new home–likely include plenty of money-related questions and concerns.

In fact, half of Americans report a worsening financial situation, with distress about saving for retirement topping the list of concerns. And a deficit of understanding about finances is costly–literally: Americans report a real cost of $1,506 due to lack of financial knowledge. “Logic would tell you that if I have some stressor in my personal life, I can’t just turn that off and not think about it when I’m at work,” says Kara Hoogensen, senior vice president of Benefits and Protection at Principal^®. 

The news isn’t all bad, though: Boosting people’s financial knowledge helps them spend less and save more, as well as make plans for the future. And providing benefits that dovetail with employee wants and needs helps attract and retain employees, according to the Principal 2024 Business Owner Insights research. Financial wellness options and programs woven into your workplace benefits plan can help achieve business and employee goals. Here’s how to better understand financial wellness and help your employees access tools to make a meaningful impact in their lives.

What is financial wellness?

Financial literacy, financial confidence, financial wellness: All are broad terms that in general refer to how well a person understands the basics of finances. Why does it matter? Improved financial wellness helps people make informed choices about what to do with their money–how much to save, what kinds of loans they may want to take out, and more. But not everyone has the same level of financial literacy or financial wellness, particularly when it comes to gender and socio-economic level. For example, men are more financially literate than women and the gap increases with income level, too.

What are financial wellness benefits?

Financial wellness benefits span a range of offerings–some of them long-term and big picture, others focused on specific day-by-day tools and solutions to help with money decisions. They may include:

• Retirement plans
• Education sessions to help choose health care options
• Budget and financial planning ideas and tips
• Disability insurance
• Counseling sessions on debt and credit
• Saving strategies for homes, college education, and emergency savings
• Reimbursement for out-of-pocket wellness programs such as gym memberships
• Will and estate planning services

What financial wellness benefits do employees want and need?

Every employee has different financial wellness needs based on their life stage, goals, and challenges. Surveys and question-and-answer sessions can help you get a clearer picture of what your workforce would benefit from. Informal chats, employee interviews (what benefits do people ask about?) and exit conversations (are any benefits mentioned as a reason for leaving?) can help, too.

In addition, broad generational needs may offer insight. “A 25-year-old may have student loans, while a 55-year-old may be contributing to their retirement account to catch up on savings,” says Nate Schelhaas, senior vice president of Benefits and Protection at Principal. “Understanding what your employees want is critical to your success.”

Generally, Gen Z may want to learn about budgeting, saving, and managing debt and finances. Both Gen Z and millennials may have a focus on student debt repayment assistance or tuition reimbursement. Baby Boomers may be more interested in understanding Social Security, Medicare, retirement income, and estate planning.

How do financial wellness benefits affect your business’s growth and stability?

Research shows financial worries impact employee retention and performance: Financially stressed employees are three times less likely to stay with their current employer and six times more likely to have troubled relationships with coworkers.

And that’s meaningful not just for your bottom line, but for employees: Research demonstrates financial education programs remove an hour of financial worries for an employee.

How can you increase use of financial wellness benefits by employees?

A financial wellness benefit is no good to you or your employees if it’s not used. A few practical tactics can help:

• Continuously communicate with employees. Start on day one and rely on different methods based on your workforce–in-person sessions, posters, mailers, for example.
• Add auto features. Auto-enrollment increases participation rates and automatically increasing contribution percentages boosts total balances in retirement savings programs.
• Match contributions. Offering an employer match incentivizes employees to save while helping build their balances.
• Regularly ask your employees which financial wellness benefits they’re using and what they’re interested in.

What specific benefits can make a difference for your employees? Principal can help: principal.com/business.

The subject matter in this communication is educational only and provided with the understanding that Principal^® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.​

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company^®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group^®, Des Moines, IA 50392.​ ©2024 Principal Financial Services, Inc. 

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