The positive impacts of employee financial wellness

The financial health of Americans is declining, with levels of financial vulnerability increasing. 70% of American households are financially unhealthy and day-to-day finances are worsening; more than half of Americans live paycheck to paycheck. 

In recent years, employers have increasingly stepped up to play a bigger role in employee financial wellness. By 2026, almost half of employers expect to offer their workers a comprehensive financial program. These programs not only help with employees' financial health, but also have a significant impact on their mental well-being. 

Research from the nonprofit organization Financial Health Network concluded that financial concerns were causing both mental and physical health to decline. Further, this trend has a direct consequence on the workplace. Mental health-related leaves-of-absence, some caused by financial issues, are up 300% since 2017.  

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The impact on the workplace 
In addition to positive personal outcomes for employees, financial wellness improves the productivity and culture of the workforce. Employers who offer these financial wellness benefits experience more motivated and less stressed team members. 

PwC reported financially-stressed employees are less engaged at work, and this group is almost five times as likely to say finance issues have been a distraction at work.

Employees are asking for help
We know workers are asking for these benefits: 74% of employees reported wanting help with their finances. These tools help with talent acquisition, too. A Bank of America survey revealed 84% of employers say that offering financial wellness tools increases employee retention, and 81% say these tools help attract higher quality candidates. For the many industries competing for top talent, this could make the difference in securing the candidates they need. 

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What should an employer's role be in supporting the financial and mental well-being of its workers, and how can they best support workers in this category? Here are several financial wellness benefits to consider:

Earned wage access
Also known as on-demand pay, earned wage access (EWA) allows employees to access their wages as they earn them, without waiting for a designated payday or paying fees.

Giving employees flexibility with the money they've earned builds trust and just makes smart financial sense. And, the concept aligns well with our on-demand culture. Employees have immediate access to most other things, and their pay should be one of them.

Employees who use this benefit typically withdraw between $85 and $135 per transaction and apply EWA towards daily expenses such as a grocery bill or unexpected car expense. When companies don't offer EWA, employees will go to third-party organizations for a payday loan, often disguised as EWA. They are then charged either a set fee per transaction or interest rates that can exceed 100%, landing them in a worse financial situation.

True EWA helps build financial stability for the employee, since it helps them to avoid taking out a loan or relying on credit to cover immediate or unexpected expenses.

Financial education
Many employees could benefit from additional resources to help them make the most of their income and save for the future. Employers can support this by offering platforms and apps with accessible articles on topics such as retirement planning and mortgage qualification. Providing these materials in one central, easy-to-navigate hub can empower employees by offering a go-to place for payslips, documents, educational resources and EWA tools.

Webinars, in-person presentations and one-on-one financial coaching can be made available to employees as well. When companies engage workers in financial education, they improve their financial literacy and enable them to make smart financial decisions. 

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Physical health 
We can't forget about the critical role physical health plays in both financial and mental health. Poor physical health is associated with depression and higher anxiety. Conversely, physical activity can reduce stress levels. Employers can most certainly play a part in facilitating and encouraging activities that promote physical health.

Ninety percent of Americans reported that financial considerations have an impact on their stress levels. Stress management tools such as yoga or guided meditations can help the overall well-being of team members. Companies can become fitness champions by allowing flexible schedules to make it easier for employees to exercise, and offering nutrition resources and fitness classes. 

Physical health can directly impact financial health in multiple ways. Healthier workers typically mean fewer doctor visits and chronic conditions, leading to lower healthcare expenses. It can also lead to fewer days out of the office, which can improve income levels. 

The impact is real
The data confirms that physical, mental, and financial well-being are inextricably intertwined. Employees who feel supported by their employers in these various areas are likely to be happier and more productive. Most importantly, employers offering these benefits are making a real impact on the lives of their employees and their families. And that is sure to have ripple effects in the workplace and beyond.