Financial Wellness: What is it And Who is Trying to Help?
If you're unfamiliar with the term "financial wellness", you might think of it simply as having a lot of money. But it's a lot more than that. Just as physical wellness is more than the mere absence of disease, financial wellness is best thought of as a constellation of habits and practices which empowers a person to achieve prosperity without winning the lottery.
The situation right now in the United States with respect to financial wellness is bleak, to say the least. 78% of American workers are living paycheck to paycheck. They are unable to save for the future, unprepared for even minor unexpected expenses, and are using up large portions of their earned income on interest, overdraft fees, and expenses related to predatory lending.
Biggie was right. Simply making more money doesn't make financial problems disappear. For example, 28% of workers making $ 50,000 -$99,999 annually, live paycheck to paycheck.
Some people might chalk all this up to a culture of personal irresponsibility, and suggest it's an individual problem. But one of the biggest problems caused by financial un-wellness is its effect on productivity: Employees obsessed with financial troubles can lose up to twenty hours of productivity per month while employees who are financially well report better health and exercise more.
So, clearly, employers need to be part of the solution. Doing so can result in a healthier and more productive workforce.
Clearly, not predatory lenders. The traditional "payroll loan" model results, on average, in $520 in interest on $3000 in loans annually. That's not "helping".
But there is a new paradigm developing, one in which innovative partnerships, Fintech, employee education and empowerment, and flexible payroll access can increase financial wellness.
Integrating financial education aimed at promoting wellness, such as teaching budgeting, cash-based as opposed to credit-based spending, and targeted savings, is essential. Companies have to take the lead in promoting financial wellness among the staff, and simply posting notices on the bulletin boards won't cut it. Outreach is critical.
As employees learn to change little habits that drain their wallets, seeing positive results will create a thirst for deeper financial literacy.
But education is only part of the battle. Innovative solutions such as ZayZoon, where payroll and employee advances are integrated to take predatory lenders out of the picture, are essential. Employees will get paid when it suits them, enabling them to meet critical financial challenges as they arise. This will result in greater personal control, and the demise of high interest and overdraft fees.
So who's offering this as a benefit? Companies like Estee Lauder, Peloton, Staples and Live Nation to name a few.
Companies like Waffle House, Home Depot and Delta Airlines have taken it upon themselves to provide online and in-person financial advice through a partnership with onUp.com which provides resources to help employees establish financial goals, start an emergency savings fund, navigate their expenses and spending habits, and take steps toward financial wellness.
Keeping the struggle for financial wellness under the company roof will pay unexpected dividends in employee morale and productivity, benefiting workers and employers. Predatory lenders are the only losers here.