We are at the halfway point in 2019 and one of my tasks this weekend is to review the Stevens family mid-year financials. It’s ironic that this task sits with me given Mr. Stevens, a former CPA and CFO, is the household CFO. He has the patience and attention to detail to pay bills, reconcile checking accounts, and deal with taxes. We set the budget together, but I do the monthly tracking. He would likely argue it’s because I’m the one who spends the vast majority of the money. I would argue it’s because I understood how to set up Mint.
Setting budgets and tracking expenses are two “best practices” for improved financial wellbeing. Candidly, we didn’t really do either very regularly until we had to fund private school for one of our kids. It happened to coincide with WeSpire beginning to apply our behavior change approach to employee financial wellbeing in partnership with one of the world’s largest financial institutions. I began to practice what they preach with renewed zeal.
Financial wellbeing statistics are pretty scary.
Nearly two-thirds of Americans can’t pass a basic financial literacy test. 44% of Americans don’t have enough cash to cover a $400 out of pocket expense. One-third have saved nothing for retirement. When PWC asked what causes employees the most stress, more employees cite financial matters than any other life stressor (job, relationship, health) combined. Financial stress also spans all income brackets and job levels.
The impact of that financial stress is significant, including lost time from work, lower productivity, depression and anxiety, and higher health care costs. According to PWC, one-third of employees, and nearly half of millennials, say that financial issues have caused distractions at work and 21% say it’s impacted their productivity. 32% say financial stress has caused health issues.
So as a leader, it’s safe to assume the majority of your team has weak financial literacy skills, a good number are living with relatively high financial stress and some portion are living paycheck to paycheck and/or struggling with crippling debt. Assuming your company is paying at least a living wage and offers good healthcare coverage, what more could you do?
Encourage participation in financial wellbeing initiatives
Just like workplace wellbeing initiatives encourage healthy eating and improved fitness, well-designed financial wellbeing initiatives can increase employee’s ability as well as their motivation to make positive financial decisions. There is conflicting information about the value of financial literacy education alone. States who have mandatory financial education in high school like Vermont and North Dakota see much lower rates of non-bank borrowing and higher rates of emergency funds. But a large meta analysis of financial education showed minimal impact. The behavioral scientists at WeSpire would tell you that education alone does not drive change. You also need motivators, nudges and triggers and most importantly, programs timed at the right decision points to make a difference.
Set-up and support access to financial counselors
The top-ranked benefit in the PWC financial wellbeing survey was access to financial counselors and coaching. Counseling is helpful for employees facing a short-term, urgent need or crisis. A study of nearly 6,000 people who participated in a demonstration credit counseling initiative showed that debt was lowered nearly twice as much as the national average. Coaching is best aligned for those members of your workforce who are trying to plan for long-term goals.
Create a culture of mindful spending
We’ve focused a lot on achieving profitability at WeSpire over the past two years. As a result, our team has gotten very used to talking about money at work. We regularly review our monthly expenses and ask ourselves whether the benefit is worth the cost. We always find something to change. I am hopeful that being mindful about spending in the office also encourages more spending mindfulness at home.
So if you haven’t done a mid-year financial health check of your own, I encourage you to try it. Whether you then set a goal to pay down a credit card, increase college savings or fund that dream trip to New Zealand, budget your spending accordingly. Then because you can’t manage what you don’t measure, join me as the household “progress tracker.” It’s more fun than it sounds and I’m holding out for research that proves it’s just as good for your health as going to the gym.
Quote of the Week: One penny may seem to you a very insignificant thing, but it is the small seed from which fortunes spring.Orison Swett Marden