The 2021 SmartDollar Financial Wellness Benefits Study, conducted by Ramsey Solutions, looks at survey data from benefits decision-makers in more than 1,000 companies of all sizes across the U.S.
Employees need help with their money, and it’s up to their employers to help them. And after a comprehensive deep dive into the world of benefits, the study found that employers have never been better positioned to help their employees than they are right now through the power of financial wellness. But that’s not all the study found.
Key findings of the study
The Impact of COVID-19
We all know COVID-19 punched businesses and their employees in the gut, but it stole their lunch money too. The study found that four in 10 organizations suffered a decline in revenue in 2020 due to the pandemic. And it’s not rocket science to figure out how a loss in revenue would affect their budgets for benefits. Spoiler alert: It was significant.
When it comes to the effects on employees, 77% said the pandemic had a moderate-to-significant impact on employee mental health, and 68% noticed a significant impact on their employees’ financial health. Clearly, both businesses and employees got steamrolled.
But it’s not all bad news. After all, adversity is a chance to learn. And a third of these benefits decision-makers said they experienced an increased awareness of their employees’ financial troubles. Nearly half said the pandemic made having financial wellness as part of their employee benefits packages a priority.
Look, if COVID-19 taught us anything, it’s that American businesses and their employees were not ready for a rainy day—let alone a pandemic. Even though the pandemic will most likely be a one-time event for all but a few of us, the financial struggles employees face every day have been around for generations. Employees have been dragging their financial baggage in through their employers’ front door for a long time, and it’s been wreaking havoc on the bottom line through turnover, absenteeism, lost productivity, and delayed retirements.
Simply put, the fallout of 2020 wasn’t some kind of one-hit-wonder. It was the natural result of a financially struggling workforce scratching to survive a massive economic downturn with almost no help.
The importance of financial wellness
Employee financial stress isn’t a new thing. The money culture we live in is toxic. Millions of employees are drowning in debt. Many don’t follow budgets. Most live above their means. Those are all facts. And it isn’t an isolated thing. All kinds of employees up and down the payroll are living in that mess. They need help—they need true financial wellness.
True financial wellness is when employees . . .
- Have control over their day-to-day finances
- Have enough cushion to handle most financial emergencies
- Are out of debt and able to manage their expenses without the use of a credit card
- Are on track to meet retirement and savings goals
And not many companies can say that about their employees. Want proof? A third said their employees’ level of stress is too high, half said financial stress has a significant impact on their employees, and three-quarters said they have employees who are delaying their retirements for personal financial reasons.
As if that’s not bad enough, SmartDollar’s study also found that there’s no industry, type of work or level of payroll that’s immune to employee financial stress. Yes, that means even those making six-figure salaries are dealing with the stress of bad money habits like debt and living above their means. That’s a huge problem for employers because financial stress follows employees into work and fuels those bottom-line killers—turnover, absenteeism, lost productivity and delayed retirements.
It’s clear: If companies care about their employees, putting off a financial wellness benefit isn’t just a bad idea—it’s an expensive one.
Financial wellness is the top benefit to add
After an eye-opening year, benefits decision-makers are looking for ways to help their employees with their money. That’s where financial wellness benefits come in and why benefits decision-makers who answered the survey said it’s the top benefit they’re looking to add in the next couple of years. But it’s not just the pandemic’s effects on employees that’s motivating employers to help. It’s that financial wellness is widely viewed as a very valuable benefit to offer.
On top of that, benefits decision-makers are seeing awesome results when they offer financial wellness to their employees, including boosts to recruitment and hiring, improved morale, and reduced employee stress.
It’s clear that financial wellness benefits make a huge difference in employees’ lives—and that carries over to the companies they work for. A huge number—90% of employers who offer financial wellness—say it’s one of the most impactful benefits they offer to their employees.
The takeaway
The impact a financial wellness benefit can have on companies and their employees is not just measurably significant—it’s timely. So many employees are still shaken up by the year they just had. If companies care about their employees and want to add value to their lives for the long term, then there’s no better benefit to add than one that teaches them how to follow a budget, get out of debt, save for the future, and retire with confidence. There’s no better benefit to add in 2021 than financial wellness. It just can’t wait any longer.
All data is taken from The 2021 SmartDollar Financial Wellness Benefits Study.
Brian Hamilton is the senior vice president of SmartDollar, a financial wellness benefit from Ramsey Solutions.
