Everyone struggles with financial wellness at some point or the other, but with proper training and guidance, one can overcome the hurdles. Financial wellness is important because it brings forth mental peace and rids a person of undue stress and anxiety. When a person is at peace, he or she functions very well and the productivity at work increases as well. So if you are a business owner, you need to take charge of the financial wellness plan of your employees.
Doing this will help your employees to a great extent and will also drive in more profits your way. Read on to know more.
- Why is financial wellness important?
- Common reasons why many people struggle to achieve financial wellness
- Top #3 Ways to achieve financial wellness at work:
- Financial wellness and income – the correlation
- Designing programs to increase financial wellness at workplace
- What does financial training comprise of?
- Importance of employee financial wellness
- Ensuring proper implementation of financial wellness
- In a Nutshell
Why is financial wellness important?
Financial wellness at workplace is very important. This is because the financial journey of an employee essentially begins from his or her workplace. The salary earned is the largest and for many, the only source of money. Sadly, many employees live on a paycheck-to-paycheck basis. They are unable to manage their expenses and end up with practically no savings. This is why it is crucial for an employer to step in and ensure employee financial wellness takes place on multiple levels.
Here are the most common reasons why many people struggle to achieve Financial Wellness on a day-to-day basis:
1) Faulty debt management –
Many employees may be struggling because they have too many loans and no idea how to repay them. Proper debt management is an integral component of financial wellness plan. If an individual has a student loan, a home loan, a car loan and a personal loan that he is repaying, it will become difficult for him to clear all the EMIs.
Myth: At times, people also end up taking additional loans to manage their existing loan liabilities. This causes havoc to their financial wellness and brings forth excessive stress and anxiety.
Truth: This is the biggest reason for a lot of people to fall into the debt trap!
2) Unwillingness to make a budget –
Although simple it may sound, most people are either unwilling or unable to follow certain basic financial rules such as making a budget for themselves. No matter what the earning and the spending is, a proper budget definitely needs to be in place. Without a budget, aimless spending can happen and that can lead to further financial hardship for a person who is already struggling with his money!
Myth: People feel that since they don’t have too much of a disposable income and they almost live from salary-to-salary, creating a budget and sticking to it is of no use.
Truth: This is a misconception, as a budget helps you to spend smartly and save, even when your earnings and low.
3) Tax inhibitions –
Taxation is an integral part of everyone’s financial lives. Whether they pay a huge amount of money as income tax each year or not, understanding the tax structure is crucial. This is especially true since there are two income tax regimes that can be chosen.
Myth: Faulty knowledge of the taxation norms leads to many challenges that range from tax returns not being filed on time to avoidance or high interest on overdue taxes! These factors pile up the financial problems for your employees and keep them away from achieving financial wellness.
Truth: A proper understanding of the taxation norms might enhance the financial wellness of your employees.
4) Faulty investments –
There are many investment opportunities available in India. From the basic post-office saving schemes to the more complex investment options, your employees can invest their money in various ways.
Myth: Proper information about investments is only required if the investment corpus is high.
Truth: A lot of people may not have proper financial knowledge about investing properly, as per their financial capabilities and risk-taking abilities. This leads to faulty investments that subsequently lead to financial disasters.
5) Poor financial literacy –
And finally, it is common to find a deficit of correct financial understanding among employees in general.
Myth: Everyone seems to know about the basics of economics such as savings, investments, taxation and so on.
Truth: However, if you dig deeper, you will find that the knowledge is very limited and often the financial literacy is very poor. This is one of the main reasons why they fail to achieve financial wellness plan.
As an employer, it is your duty to make sure no employee working in your organisation faces financial hardships due to the reasons mentioned above. You need to take charge and implement financial wellness at work. Thankfully, there are some very effective ways in which you can achieve this.
Read about the importance of financial literacy at workplace
Top #3 Ways to achieve financial wellness at work:
You can help your employees achieve financial wellness in the following ways:
1) Helping them make better financial decisions –
As stated above, making poor financial decisions that range from not filing the taxes properly to investing incorrectly, your employees end up losing a lot of money that makes their financial life a mess.
Pro Tip: Help them to make better financial decisions by counselling them on how to make the best financial decisions.
2) Training programs to inculcate good financial skills –
An employee needs to be financially skilled to take care of his own financial wellness. This requires training over a period of time.
Pro Tip: Once your employees understand the basics, they will be more skilled to make the correct financial moves independently, and this will be a major step towards a comprehensive financial wellness plan.
3) Helping them to reduce financial stress –
And finally, your employees can only achieve financial wellness when they have a calm and worry-free mind. If they are constantly worried about money matters and how to manage their monetary duties, they cannot focus on anything else. As a step to bring financial wellness at workplace, you need to help your employees to let go of this stress.
Pro Tip: Offer therapeutic facilities such as access to a counsellor, mental relaxation games, access to better healthcare, etc. Becoming stress-free is the first step towards achieving financial wellness at work and in life.
Rather than organising one-off workshops or training modules, it is always better to integrate the employee financial wellness programs holistically into the work ethics of your company. This is an important step towards bringing financial wellness at workplace. Train and counsel your employees continue to make sure financial wellness at workplace happens on a regular basis and your employees get their economic live son track.
Are your employee feeling financially stressed? Here’s How to Help! Read our blog to know more
Financial wellness and income – the correlation
Financial wellness does not solely and wholly depend on the salary of an employee. A person who earns a few thousand rupees a month might be financially well and sound because he lives within his means saves and manages his financial duties with proper care. On the other hand, a person who draws a salary of Rs 5 lacs a month might be in a financial mess due to his extravagant lifestyle, a habit of overspending and poor financial literacy.
This analogy proves that it is not always the volume of the salary that ensures employee financial wellness. The individual’s financial literacy and money management skills are of extreme importance. Every employee has a different degree of financial knowledge and, as is evident from the points mentioned above, his or her financial wellbeing belongs greatly upon it.
It is, therefore, a very good idea for you, the employer, to ensure financial wellness at work by organising holistic financial literacy programs that benefit all the employees of your organisation.
Download a complete guide on Financial Wellness for FREE!
Designing programs to increase financial wellness at workplace
A compassionate employer who genuinely cares about the wellness of his employees will not fall short of ensuring that the employees receive the correct type of training, as per their requirements. To design the best programs to help your employees, you first need to evaluate the following:
1) Evaluate and assess the pay-structure of the organisation –
Before looking towards the employees to assess their financial statuses, you need to take a good and hard look at some of the facilities you offer to them. A major area is the pay structure of your organisation. Are the salaries you pay at par with the industry standards? Are you paying your employees too less? You need to evaluate this aspect and ensure your workforce is getting what they deserve. If the wages are too low, it is normal for people to worry and struggle financially.
2) Evaluate the financial literacy levels among the employees –
As mentioned above, all your employees may not be at the level of economic literacy. So before a financial wellness program is designed, ensure you understand the financial literacy levels of the employees and design or employ pieces of training that can help them to the greatest extent.
3) Evaluation of dependency on other financial aids –
Many people depend on additional financial aids like payday loans or personal loans. The dependency on such tools can prove to be very harmful in the long run and pull your employees into deeper financial distress. Make a truthful assessment on the overall dependency on such aids and see how you can help them get out of the trap.
Once you conduct these assessments, you will know where your employees stand. You can segregate them in groups and offer effective financial wellness programs that would help your employees to overcome their monetary hardships and also free them of stress and anxiety.
What does financial training comprise of?
There are many different forms of financial training available. However, an effective program would surely educate your employees on the following topics:
Step #1: Saving money –
Saving money on a regular basis is of utmost importance and is perhaps the most effective step towards achieving financial wellness. You need to train your employees on how to save money. The financial training material must comprise of this area as without proper savings, an employee cannot achieve his long-term financial goals.
Step #2: Budgeting –
As stated, making and maintaining a budget is of great value. But many people do not know how to make a budget. Making a budget does not simply mean noting down the incomes and expenditures. A budget is a plan and needs proper designing. A good financial wellness training program can tell your employees all about budgeting.
Step #3: Planning for their retirement –
It is crucial for all individuals to plan for their retirement. You are not going to pay for the expenses of your employees once they retire, so you need to make sure they set up a retirement fund early on in life. A retirement corpus needs to be created and maintained diligently and a good financial training program would tell your employees how to go about this.
Step #4: Investing –
Investing money in the first product you come across can be tremendously dangerous! Investing without proper knowledge and understanding is much more dangerous than not investing at all. Train your employees about the correct ways in which they can invest their money as this would be a great step towards bringing financial wellness in their lives.
Step #5: Maintaining a proper credit score –
Do your employees know about the concept of credit score? It may seem like a simple concept, but a large number of people do not even know it exists! Yes, that is correct. You need to inform your employees about the significance of having good credit and what a high credit score can do to their financial capability.
Once your employees understand these fundamental financial concepts, they will begin to improve their financial wellness, which would be of help to them and to you as well.
Importance of employee financial wellness
An organisation that has a happy workforce is an organisation that records better profits. This is an actual, hard fact because your employees are ultimately the backbone of your firm that keeps it upright.
The reasons that make employee financial wellness important are:
1) Better performance –
An employee who is constantly bogged down with stress and anxiety will find it very difficult to concentrate on anything else. His mind will remain clouded and he will have little enthusiasm left. This will greatly affect his work productivity as he will not be able to focus on the assignments he needs to complete. If however, he is stress-free and relaxed, he will be more enthusiastic and focused and will deliver very well at work.
2) Increased loyalty –
If you help your employees to achieve financial wellness, they will surely be grateful to you. The gratitude would make them better and more loyal and this would help you to have a strong and reliable workforce. After all, the efforts of your employees would ultimately bring in the profits, so you need their support in every possible way.
3) Good reputation for the firm –
And finally, your efforts to bring forth financial wellness at the workplace would surely fetch some good amounts of reputation. You will be known as an employer who takes care of his employees and worries about their financial wellness. This would not only win you accolades, but it would also make the most talented candidates eager to work in your organisation.
Keeping these points in mind, it can indeed be said that regular employee wellness programs must be deeply integrated with the work culture of the organisation.
Here is a more detailed guide on financial wellness. Download the guide for FREE
Ensuring proper implementation of financial wellness
As an employer, you need to ensure your employees are financially well. Do not treat this merely as a duty that you need to fulfil. Rather, be empathetic and treat this as a necessity for the overall wellness of your company. Hire a proper institute who can train your employees and help them achieve financial wellness in a proper and apt manner. There are some highly competent academies such as Koppr Academy that offer excellent financial courses for employees.
You can collaborate with Koppr Academy and enrol your employees for some of the best financial literacy courses. They can learn about several economic areas such as investments, taxation, budgeting, etc when they attend these courses. The courses are available online so your employees can access them at their own convenience. The course material is designed by some of the leading economists, which prove to be highly effective.
In a nutshell
To put it in a nutshell, financial wellness at work has no alternative. As the employer, it is your responsibility to ensure your employees achieve financial wellness at every level. Keep all the tips and guidelines mentioned above and you’ll surely be able to provide the help your employees need. Remember, an employer is highly regarded and trusted by his employees. You must make the most of this and offer all the help you can to your invaluable workforce.