After the costly holiday season, the new year is a great time to reset and embrace January as financial wellness month. A recent survey found that as of October 2022, around 60% of American consumers are living paycheck to paycheck. Another survey found that 84% of employees wish their employers were more involved in helping them navigate financial hardships.
Strengthening financial wellness in the workplace
There are several ways that employers can assist employees in making more informed financial decisions. Employers can:
- Thoroughly explain what benefits are available. It is important that employees fully understand their choices and choose the most suitable benefit options. If applicable, employees need to know the differences between health savings accounts, health reimbursement accounts, and flexible savings accounts. If employers offer a 401(k), an employee assistance program, or commuter benefits, employees need to comprehend the monetary advantages of utilizing them. Works need to understand how the offerings relate to budgeting, managing debt, and retirement.
- Keep an open line of communication. Benefit offerings should align with the majority of the workforce’s needs. Therefore, employers need to seek employee feedback regarding what benefits are utilized and how they can be improved. Additionally, it is important to stay informed on trends and provide options accordingly.
Strengthening financial wellness at home
While understanding and taking advantage of workplace benefits is helpful, employees need to spend their money as responsibly as possible in order to achieve financial wellness. Employees should:
- Understand their financial goals. This involves writing down all fixed and flexible expenses, earnings, savings goals, and investments, if applicable.
- Create a budget. Based on the financial goals, an employee can make a budget to ensure responsible spending. If the budget is impossible to keep, then the goals should be revisited and the budget adjusted.
- Monitor their credit reports. Credit is critical as it affects interest rates and loans. When an individual consistently pays their bills on time, they receive a better credit score, which allows them access to better loans and rates. Experts consider a good credit score to be between 670 to 739. Any number above that is exceptional, and anything below is considered poor.
Spending and saving money can be a source of great stress, but by utilizing workplace benefits and adhering to a manageable budget, superior financial wellness can be achieved.