Financial Wellness Benefits Double as Mental Health Benefits

Financial wellness is a challenge these days. In an unpredictable economy, it’s all too easy to start doom-spiraling as bills pile up and grocery receipts reveal eye-popping numbers. Across the country, people in all industries are feeling the squeeze amid economic uncertainty with the rising cost of living and job market fluctuations. Nearly two-thirds of Americans are living paycheck to paycheck, and credit card debt is growing to record highs.

Some generations have been hit harder than others, as a recent study conducted by my team found. Millennials are spending 32% more than they did a year prior. Gen Z and Gen X aren’t far behind, with a 19% year-over-year spike in spending.

So it’s no surprise that money is the most common cause of stress for American adults, with nearly three in four identifying it as a significant stressor. Financial stress is cited as the most harmful factor affecting U.S. adults’ mental health, with more than half of respondents mentioning it in one survey. Financial anxiety can manifest in feelings of worried thoughts, difficulty sleeping and depression.

But Isn’t There a Meditation App for That?

Simultaneously, the topic of mental health in the workplace has become more prevalent as younger generations have taken over the workforce. It’s encouraging that many employers have expanded their mental health benefits in recent years, from improving insurance coverage to offering free mindfulness and therapy apps. These resources are undeniably valuable and make a difference in many people’s lives.

But the truth is while meditation apps can be helpful in anxious moments, they won’t make employees’ debt magically disappear or pay their rent on time. While these perks may treat the symptoms of financial anxiety, they’re not solving the root cause of the distress.

Self-care unfortunately can’t solve systemic and macroeconomic issues, or extract people from lifelong debt cycles.

These stark realities have inspired a growing awareness of financial wellness benefits and how they affect other aspects of employees’ well-being. When workers don’t have enough in their bank accounts to make ends meet, this can lead to the perception that they’re overworked and underpaid. They may start feeling disconnected from their careers and resenting their employers, triggering a cycle of distraction and reduced productivity. In severe cases, this low morale can be contagious and spread across teams, sowing seeds of unrest.

Holistic Benefits Packages Include Financial Wellness

To adequately support employee health, it’s important to evaluate your benefits package from a holistic perspective that encompasses the full spectrum of wellness. When employees are constantly concerned about financial obligations that are taking a toll on their mental health, they’re not able to show up at their best.

In recent years, more companies than ever have expanded their financial wellness benefits beyond just a paycheck and a 401(k) plan. Workers increasingly see emergency funds, tuition reimbursement, on-demand pay and money coaching as essential components of their total compensation packages, with 77% of workers viewing financial wellness benefit programs as important. Employers have seen positive results, with 85% of companies saying that financial wellness benefits have positively impacted their employees’ mental, emotional and social well-being.

PayPal is one employer that saw an opportunity to include financial wellness benefits in their employee wellness program and pounced on it. CEO Dan Schulman realized an increasing need among the company’s hourly and entry-level salaried workers, so he created an employee relief fund to help those dealing with surprise emergency expenses, such as car accidents or medical diagnoses. When more of his team members needed more help from the fund than he anticipated, Dan investigated further and set a goal to get employees’ net disposable income to 20%.

Since instituting PayPal’s financial wellness benefit program in 2019, and adding on-demand pay in 2020, employees’ average net disposable income has jumped to 16%, empowering employees to meet or exceed the average American’s personal savings rate. PayPal executives have said that the investment in talent was core to the company’s success during the pandemic and boosting employee productivity.

Financial Wellness Initiative

In 2021, companies like Chobani, Chipotle and Prudential joined PayPal in the Worker Financial Wellness Initiative, a coalition aimed at making workers’ financial security and health a priority for C-suite executives and investors. Participating companies conduct financial wellness assessments of their workforces and identify opportunities to improve their employees’ long-term resilience. Last year, Chobani went even further and began offering a stipend for childcare and elder care costs.

As these mission-driven brands demonstrate, investing in financial wellness benefits is a win-win situation. When you help employees build wealth and tackle money problems, they’re not only happier and healthier, they’re also more engaged, satisfied and productive.

Financial wellness benefits have even been shown to increase employee retention rates and have a significant and positive impact on turnover. Eighty-four percent of employers say offering financial wellness tools has a positive impact on retention, according to Bank of America research, and 81% say these offerings help attract higher quality talent.

Yet it’s not about haphazardly throwing benefits at the wall and seeing what sticks. The way to drive impactful outcomes is by understanding your workforce’s biggest pain points and determining how to meet their greatest needs. HR leaders have a pivotal responsibility in determining the benefits that are right for their employees and vetting the best partner providers to deliver them. At the end of the day, mindfulness matters but money talks.

Tech Support

Benefits management tech platforms on the market can supercharge financial wellness benefits by connecting employees to tools like budgeting calculators, debt management resources, retirement planning tools and educational content. This allows employees to easily access financial guidance alongside their other benefits information.

This software can also help administer and track utilization of financial wellness benefits like student loan assistance, tuition reimbursement, health savings accounts (HSA), emergency funds and on-demand pay access. Employees can view and manage these benefits through a single portal.

Some platforms have the capability of targeted communications to promote financial wellness resources, workshops or coaching based on employee demographics, life events or expressed interests.

And if a benefits management platform is integrated with your payroll system, it can facilitate automatic payroll deductions for things like HSA contributions or student loan payments as part of a financial wellness package