If there is one thing that has been made clear by the COVID-19 pandemic, it is that few of us, or our families, are immune to the risk of financial insecurity or job loss. Financial well-being is critical to overall well-being. Financial stress, like other forms of stress, takes its toll on physical and mental well-being. When it comes to the workplace, it can impair employee performance, productivity, morale, and safety and also lead to physical ailments such as headaches, fatigue, hypertension, depression, and other chronic conditions.

With this in mind, it is clear that financial well-being programs are a must-have for programs designed to support worker health and productivity. As we emerge from the pandemic and its lingering economic outcomes, it is time to consider new ways to support employees’ financial well-being.

Even before COVID-19, research found that concerns about personal finances distracted one in three employees while at work, and other research from the Federal Reserve, published in May of 2019, revealed that 40% of Americans would have to borrow money or sell something to cover a $400 emergency expense, 17% of U.S. adults were unable to pay all of their bills every month, and 25% of Americans skipped necessary medical care because of cost concerns.

An effective workplace financial well-being program requires an understanding of employees’ financial lives. We all perceive the amount of money needed to support a feeling of financial security differently, so a common definition of financial well-being is necessary to design effective workplace programs and assess progress made over time. Research from the Consumer Financial Protection Bureau (CFPB) defines financial well-being as a state of being wherein a person:

1. Has control over day-to-day, month-to-month finances;
2. Has the capacity to absorb a financial shock;
3. Is on track to meet financial goals; and
4. Has the financial freedom to make the choices that allow him or her to enjoy life.

This toolkit from CFPB includes case studies and tips for starting financial well-being conversations with employees and cultivating this level of understanding.

Employee financial well-being programs offer an array of financial education programs and services, such as loan and financial counseling, that can support employees through tough financial situations. The Social Policy Institute at Washington University in St. Louis and the National Fund for Workforce Solutions have collaborated on a Guide to Employee Financial Wellness to help employers identify the best program for their team. The guide combines four years of research and best practices collected from a wide range of employers. It outlines six steps to selecting and implementing an employee financial well-being program.

Additionally, a trip to the Social Policy Institute’s website finds several new tools to support worker’s financial well-being, like this app that enables easy payroll savings deductions or this research paper on short-term, zero interest loans for low and moderate wage workers.

Warm Regards,

Louise Y. Probst

BHC Executive Director