Stretch Pay Raises with a Financial Wellness Program

U.S. News shared that employees across the nation may be receiving raises up to 4% this year,¹ which gives employers good reason to promote a financial wellness program.  Why?  Because a holistic financial wellness program isn’t just for a recession.  As employees’ wages and salaries increase, they need education on where they might put that extra money to make it more effective.

Why Employees Want Financial Wellness and Why You Need It

Promoting financial well-being with wage increases can encourage your employees to use their money wisely, and it can decrease financial worry in the workplace and improve productivity.  Currently, 97% of employees concede to working on or thinking about personal finances during their work day,² and 1 in 2 employees say their financial worries make them less productive.³  Turn that around with better finances:  57% of employers believe that financial education positively effects employee productivity.⁴

Financial wellness can empower employees to put their best foot forward and focus on their job because they don’t have to worry as much about their own financial situation.  Not to mention, it’s what employees want:

• Half of employees (49%) think that employers are responsible for employees’ financial wellness.³
• Half of employees (49%) dealing with financial stress want their employers to help them achieve financial stability through benefits.³

It’s important to note that employees mentioned the need for financial wellness rather than more money.  So, why is a bigger paycheck not the solution for solving financial stress?  Why would employees be inclined to use a financial wellness program when they just got a raise?  Two points…

Financial Stability

While everyone loves a pay raise, there is something bigger and better: financial stability.  In fact, 9 out of 10 people would rather have financial stability than get a raise.⁵  Financial stability involves good financial habits and a stress-free sense of control over one’s current and future finances.  Without financial stability, employees are more likely to get the “trade-up syndrome” when their wages increase.

The trade-up syndrome is when you start spending more money because you start making more money.  If employees only use their new wages to purchase more things, that moment of power and celebration quickly leaves when they realize they still have debts to deal with and a lack of retirement savings.

Learning about and establishing financial stability through a financial wellness program can combat the trade-up syndrome by teaching employees smarter ways to use a pay raise and hopefully allowing for both immediate celebration AND long-term success with money.

Build a Better Future

Encouraging your workforce to focus on their financial well-being isn’t just about fixing problems like bad credit or loads of debt; it’s about learning healthy financial practices and putting that pay raise to good use in order to build a better future.  With a financial wellness program, employees can develop an action plan and receive accountability, so they can…

• Eliminate debt
• Improve credit
• Build savings
• Develop and achieve short, mid, and long-term goals
• Increase retirement contributions
• Cultivate investment skills
• Celebrate progress
• And more…

See the Results

Whether employees are getting a pay raise or not, they can benefit from a financial wellness program because it’s about helping them gain more control of their finances and improve their well-being.

• 45% of employers think providing financial education is important in helping employees achieve financial stability.³
• Over half of employers (53%) saw an improvement in overall well-being due to their financial wellness programs.⁶
• Employers say overall financial wellness for their workforce means higher levels of satisfaction (76%), loyalty (66%), engagement (65%), and productivity (55%).⁷

Next Steps

If you’re interested in providing a financial wellness program for your workforce (76% of employers are planning to.⁸), consider the MSA financial well-being program.  Talk to a Customer Success Manager about how you can make a pay raise for your employees even better.  Call 888-724-2326 today.

¹ Cleaver, Joanne.  “What to Expect from Your Company’s Financial Wellness Plan.”  money.usnews.com.  U.S. News, 17 Sep. 2015.  Web.  21 Sep. 2015.

² Financial Wellness Landscape Analysis: An Overview of the Need for Workplace-Based Financial Wellness Programs.  ING Employee Benefits, 2013.  PDF.

³ Benefits Impact: Delivering Dynamic Benefits for a Loyal Workforce.  Metlife, 2015.  Web.  12 May 2015.  PDF.

⁴ “Benefits Breakthrough.”  12th Annual U.S. Employee Benefit Trends Study.  New York: Metlife, 2014.  Web.  17 Apr. 2014.  PDF.

⁵ Financial Security and Mobility.  “Americans’ Financial Security: Perception and Reality.”  pewtrusts.org.  The PEW Charitable Trusts, 5 Mar. 2015.  Web.  19 Aug. 2015.

⁶ Paycheck Direct, SourceMedia Research and Employee Benefits News.  Promoting Financial Wellness in the Workplace.  N.p.  2013.  Web.  15 Oct. 2013.  PDF.

⁷ “Financial Literacy Begins at the Office.”  PFEEF Newsletter.  19 Dec. 2013.  Email.

⁸ Atchison, Amy and Rob Austin, FSA, EA.  2014 Hot Topics in Retirement: Building a Strategic Focus.  Aon Hewitt, 2014.  PDF.