What does financial well-being entail?
Many employers balance financial knowledge with financial well-being, however knowledge of finances does not translate into greater employee engagement or higher participation in financial programs.
Financial well-being includes a holistic process, it learns to successfully manage money. It makes the idea of having financial goals and a plan to achieve them, and have the financial confidence to achieve a more productive, committed, and healthy life for both its employees and their environment.
There are four pillars that make up the concept of well-being:
1 | Take control of your daily finances
2 | The ability to absorb financial shocks
3 | Real progress on mid- and long-term goals
4 | Financial freedom to make decisions that allow you to enjoy life
People first need to control their daily finances before they can calculate how much they can save. Once they have this control, they will be ready to act on unforeseen events and cope with a potential “financial shock”. Once they can create and maintain budgets, they will be ready to plan for both short or medium term goals – like travel – and long-term goals like retirement. “This hierarchy is very important, as it is the sequence that will then allow them to achieve their financial freedom,” says Clara Estefarina, Mercer’s wealth manager.
Invest in wellness
Not knowing or ignoring the impact of employees’ financial well-being can have negative consequences for the organization. “Business hours devoted to financial worries, increased stress, worsening mental and physical health, increased absenteeism, lack of commitment or prolongation of the retirement age, among other things, can be avoided if you start to realize financial health and invest it in your collaborators. Are companies ready for this?” He adds. Stevarina.
Mercer’s findings reveal that those employees with a low level of financial well-being are very likely not to pay attention to the features and benefits that employers provide. Estefarina concludes, “This will inevitably mean that, in the short term, the value proposition that companies provide will reduce their attractiveness and the task of retaining and attracting talent will become more difficult.”