Retiring in your 30s! Sounds like a farfetched dream? Dream again.
A movement called FIRE (Financial Independence, Retire Early) is growing. More and more people are leaving their jobs and leading the way to a financially secure future. But wait, how can anybody manage to save so much, in so little time? It’s called financial preparedness, and it isn’t going to happen overnight.
Since Independence, the way we approach saving money has changed drastically, but the fundamentals remain the same. But let’s be real, most of us don’t aim on retiring until we are in our 60s or 70s. And we typically plan a decade or two before that. The reality is that employers too have an important role to play in the financial preparedness of their workforces. As employees find ways to up their savings rate, employers can start financial wellness plans to improve employees’ savings behaviour – hopefully helping them to be more relaxed about finances or even retire earlier than they thought possible.
Studies have shown that financial wellbeing can affect business performance, as well as the morale of the employee. As employers, you need to first understand how employees make financial decisions and what their priorities are. So, let’s dig deeper into what you can do as employers to financially prepare your employees for the future.
Financial Wellness: Two sides of the same coin
How does it affect employees?
- The PWC 2018 Employee Financial Wellness study found that 54% of employees they surveyed were stressed about their finances. Your employees may not be vocal about financial stress, but it may be affecting them in a drastic way. Ignoring their concerns can have a negative impact on business performance.
- It’s not just about an employee’s current financial situation. A 2017 study published by Chartered Institute of Personnel and Development in London discovered that 55% of the workers surveyed, ranked “Saving for the future” high on their list of financial priorities.
- In India, a great deal of importance is placed on supporting immediate, and in some cases, extended family members e.g. your children’s higher education or your aged aunt. This can be a huge strain for the financial wellbeing of your employees, if they are unprepared.
- Women in your workforce do not necessarily have access to the same financial resources as men, e.g. assets may be in the name of the male breadwinner, and may need a higher degree of planning and support in case of any untoward event like illness or death.
Impact on your organization:
- Financial distress doesn’t only affect your employees’ morale. It also affects your bottom line negatively. A 2017 Mercer survey found that close to 16% of the people surveyed worried about money for more than 20 hours every month, contributing to a dip in productivity and increased absenteeism at work.
- Apart from being distracting, a company that doesn’t care about its employee’ financial wellbeing will have a hard time recruiting top talent. It may also suffer from high attrition rates. A study pointed out that employees under financial duress are almost twice as likely to leave for another job.
- The 2016 Willis Towers Watson study came to a clear conclusion when they compared financially struggling to unworried employees. Employees with financial worries suffer from high personal stress, poor health and absenteeism.
Things you can do:
Start your employees on the path to saving money early. Maybe you can set the tone during induction itself to let them know the importance of it. Check on them regularly through informal sessions or support groups.
Simply informing employees on the need to save money isn’t the best approach. 85% of the 18,000 people who completed our financial wellness partner- Scripbox’s – wealth check-up are still not on top of things. It’s always better to tailor plans to the individual employee’s goals and habits.
Pick the right tools
There are tons of apps, websites, spreadsheets and financial advisors out there, ready to help your employee chart a financial wellness plan. However, pick one or two to help your employees reach their goals in time. But do remember that tools are only a way to guide employees. Always give employees the freedom to take up or reject the company supported programs.
Have a plan for all levels of employees
As employees age, their needs differ. Helping employees at different seniority levels achieve relevant milestones (e.g. buying a house, kid’s education, supporting parents, preparing for retirement) needs several different approaches. Understand the benefits employees are looking for and advise targeted solutions to help them meet those needs.
Conduct Webinars on financial wellness
Technology can be leveraged in more ways than one when it comes to managing finances. Webinars are a great way to engage employees and allow them to address issues that matter most to them.
How can a financial wellness plan benefit your organization?
- Strengthen productivity – Fewer financial distractions means more focused employees and better productivity.
- Boost your brand value – Your employees serve as brand ambassadors and when you care about them, they will spread the word and bolster your company’s reputation.
- Increase retention and loyalty – Companies that are more involved in helping employees better their finances will have more satisfied and more loyal employees.
Now, who do you consult to implement a companywide financial wellness program? Reach out to the team at The Fuller Life! We’ve helped many corporates in India with such initiatives that cover sessions, webinars and collateral. Not just that, we even have creative ways to spread awareness about your company’s policies through communication using digital and floor engagement activities. From start to end, our team is ready to assist you, at every step!
Call us on +91 80500 58002/3 or email us at firstname.lastname@example.org to know more.