Economic uncertainty continues to drive employees’ concerns about their personal financial well-being. A 2024 study found that 91% of workers are stressed about their finances and 39% are overwhelmed by their financial situation. The study determined that on average, each employee lost 7.3 hours of productivity each week due to financial stress, potentially costing U.S. companies $183 billion annually in lost productivity and engagement.

Despite this undeniable impact, there is a major disconnect between the perceptions of employee needs and employer support. A whopping 76% of employees are not satisfied with their company’s financial benefits and resources, but 92% of company leaders state they offer employees the financial guidance, support, and tools they need.

Leaders agree that employees’ financial stress has unwanted consequences for their companies with 87% reporting that it hurts engagement and productivity, 78% stated that it impacted productivity and profitability, and 78% reported that it led to higher employee turnover last year.

These statistics are eye-opening, to say the least. It is obvious that work is needed to bridge the gap between owners and employees’ perceptions. Let’s look at ways to create financial wellness – not only for your employees, but for the health of your company as well.

Today’s Labor Force by Generation

It is important to look at the various generational groups which comprise the overall labor force when assessing strategies, programs, and effective modes for delivering them. In 2023, a milestone occurred with Gen Zer’s surpassing Baby Boomers in the workforce. According to data from the Department of Labor, the following is a breakdown of the labor force as of mid-2024:

Baby Boomers              15%

Gen Z                             18%

Gen X                             31%

Millennials                     36%

Times are changing – new hires are showing up with diverse needs and expectations. Financial wellness programs are now the number one most-wanted benefit among employees, leading over flexible time off and development. Studies show that this isn’t just a desired benefit; it is an expected benefit, as nine out of ten employees  reported they expect employers to provide financial wellness resources.

So, what does this mean for employers? This wide range of generations is a key factor catalyzing the need to create financial literacy initiatives which meet employees where they are in life and are delivered in a way that they understand. Solving the issue is essential – financially stressed employees have a costly impact on workplace productivity, retention, and overall employee well-being.

As you can see, it is critical that employers step up their offerings to cultivate meaningful financial literacy programs that make a positive impact on employees’ home and work lives.

From Financial Literacy to Financial Wellness

As the ancient saying goes, “Give a person a fish, and you feed them for a day; teach a person to fish, and you feed them for a lifetime.” To cultivate financial wellness in the workplace, you must first teach the necessary financial skills needed to attain such wellness.

Financial literacy is the understanding of and the ability to use financial skills such as managing money and budgeting. It encompasses everything related to personal finances and investing, including taking out loans, retirement planning, saving money, and paying bills and other expenses.

Financial wellness means having financial security and the confidence that one could survive a financial shock. It also means a feeling of control over your finances, meeting financial goals, and having financial freedom to make personal decisions around money.

How can employers help their employees’ path to financial wellness? Creating or revamping a financial wellness plan which teaches financial skills is vital. Let’s look at how to do just that.

Creating a Financial Wellness Program

An effective wellness program should be personalized and comprehensive, providing employees a clear picture of their own financial health in the short-run and on a long-term basis. It should combine financial education, resources, and support to help employees understand the importance of budgeting, saving, setting financial goals, and managing or reducing debt.

Next, let’s look at how to create a program that is a win/win proposition for your company and employees.

1. Set Goals: Identify what you want to achieve with the program such as improved productivity, employee satisfaction, employee retention, or increased attendance.
2. Determine Key Topics: Determine which topics are most relevant to your team. A good place to start is by surveying employees to see which topics they consider of greatest interest. This takes the guesswork out of the planning process and leaves your employees feeling like they are valued. While simply offering access to financial education is a step in the right direction, assessing which programs can maximize learning potential is critical to truly improving financial wellness in your employees’ lives.
3. Design the Program: Decide how you will provide the information and resources. To make financial education engaging and exciting, employers must work with modern offerings to understand how to connect with employees. Assess the profile of your employees to determine which delivery methods should be most effective. It may mean that you are delivering the same material via multiple learning modes to reach each generation in need.
4. Choose Delivery Channels: Assess the make-up of your team and choose the appropriate learning channels to offer based on the generations represented. A trend in financial education is a rise in the use of short-form content which may be stemming from shortened attention spans—Millennials average a 12-second attention span with Gen Zer’s falling to an eye-opening 8 seconds. With attention spans decreasing, short-form content works to make learning digestible and achievable. Let’s look at the most common learning channels:
   • Lunch and learns – traditional learning mode with classes facilitated in person (or virtually) over lunch. Allows for personal interaction and questions.
   • Webinars – recorded content consumed at each employee’s pace. Knowledge assessed via online testing. Associated with all generations, they often lack interaction capability.
   • Digital Programming – learning on mobile phones. As 85% of Americans now own a smartphone, this option allows for learning across generations, regardless of demographic or socioeconomic factors. Employees choose when and where they would like to learn.

Remember to consider ways to make learning engaging and fun. Introducing methods of gamification such as competitions, leaderboards, and rewards can increase enthusiasm, enhance retention, and help overcome any hesitation to utilize learning technology.

Financial Literacy Topics

There are a multitude of financial topics to choose from. Again, polling your employees to get an idea of the areas they need help with is a good starting place to prioritize topics. Let’s look at the more common financial literacy skills needed below.

Some people go through life without ever creating a personal budget and many of those that do create one do not stick with it. Teaching your employees how to create a budget and set long-term financial goals can help reduce their stress and give them a feeling of empowerment.

Budgeting

Introduce various budgeting and expenditure tracking apps, how to create a budget, and stick with it. This also means setting financial goals and how to achieve them.

Retirement Planning

Employees might not take full advantage of their company’s retirement plans. That’s why retirement planning education should start with an overview of the specific 401(k) plan provided by the employer and how to manage it for their individual investment goals. Share key pointers such as contributing at least the percentage the employer matches with their contributions.

Forecasting the cost of retirement is a good exercise to analyze monthly savings needed now, based on their age and when they expect to retire. For younger employees, focusing on the value of compound interest and how saving more today can reap substantial rewards later. Other topics may include the benefits of health savings accounts (HSAs) and Roth IRAs.

Employers typically outsource their 401(k) management to investment firms which should be able to provide resources and individuals who could contribute to or run a seminar on these topics, as well as how to make sound investment choices.

Buying a Home

For employees who are saving up to buy a home, let them know the kind of options they have for mortgages, especially for first-time homeowners.

You could explain the different kinds of conventional mortgages available, as well as those backed by the federal government (FHA, VA, and USDA mortgages). They’ll also need to know what the average home price is in their targeted areas, how to work with a realtor, negotiate contracts, and information regarding down payments and closing costs.

Managing Debt and Credit

Debt is readily available and is a huge source of financial stress for many Americans. A debt education plan should focus on the types of debt, interest calculations, and options to pay off or consolidate debt to reduce monthly payments. Employees should learn to read their own credit report, understand what a good credit rating is, and why maintaining a good credit score is important. They should learn how the diverse types of debt, amount of outstanding credit, and whether payments are timely or not, all contribute to their over credit score.

Existing homeowners could be unaware of how they can use that asset to consolidate debts and reduce interest costs, such as paying off higher-interest credit cards by refinancing their mortgage or obtaining a home equity loan or a home equity line of credit (HELOC).

For those saving for a child’s education, give them an idea of monthly savings needed now, and discuss educational savings programs including state prepaid tuition plans and 529 plans. Include information regarding student loan options if needed, and for those with existing student loans, information regarding debt relief programs.

Setting up an Emergency Fund

An important topic is to ensure your employees have access to readily available savings in case of emergencies or unplanned expenses. A recent poll by  U.S. News & World Report revealed that 60% of Americans said they had an unexpected expense within the past year, while 40% didn’t have enough in cash or savings to cover a $1,000 emergency expense. Financial advisors recommend having three to six months’ worth of living expenses that someone could easily access in an emergency.

Just the fear of a financial emergency can cause a great deal of stress for your employees, especially if they must take on debt, such as a higher-interest credit card which puts them further behind.

How and Where to Save

While setting financial goals and building an emergency fund are worthwhile objectives, your employees might be unaware of how to make the most of what they set aside by putting it into savings and money market accounts, or certificates of deposit (CDs).

Discuss strategies and the differences of short and long-term savings maintained at banks, and investments at a brokerage firm. Share tips such as use of automated transfers from checking to savings as an effective method to help them meet their goals.

Financial Coaching and Counseling

Offering personalized coaching and financial counseling to employees can emphasize what they’ve learned through your financial wellness program and give them a more detailed strategy that addresses their situation.

Consider offering this as a reward for those who participate in your financial wellness program. Even one or two free meetings with a financial counselor can go a long way to help your employees get on the right path to financial security. It’s also a way of letting them know that you care about their fiscal health and well-being.

The Cogent Employee Advantage

Cogent’s Employee Advantage program is a partnership with our business banking customers and their employees, with a personalized service that includes on-site meetings with employees to guide them in setting up accounts and answer any questions they may have. This personalized approach can help you attract and retain top talent, creating a more satisfying and productive workforce.

Benefits include a lender credit for the home mortgage processing fee (up to $695) to reduce a borrower’s closing costs, and personal checking accounts and money market accounts with no minimum balance required to avoid service charges, as well as ATM/debit cards and other services.

Ready to Learn More About Workplace Banking Programs?

Discover the benefits of workplace banking and how we can help your employees reduce their financial stress while providing your company with business banking products and treasury management services. Cogent Bank is headquartered in Florida with locations throughout the state to serve you. Reach out today to discover how we can partner with you in moving your business forward.

Disclaimer: The information contained herein is for informational/educational purposes only. The views and opinions expressed in this document may be those of the individuals and may not necessarily reflect those of Cogent Bancorp and its subsidiaries and affiliates, or the entities they may represent. Content contained herein may be used in connection with the advertising and/or marketing of products offered by Cogent Bank or Cogent Private Wealth. The material is not intended to provide or substitute for legal, tax, or financial advice or to indicate the availability or suitability of any Cogent Bank product or service. You should consult with a legal, financial, tax, or other appropriate professional(s) for your specific needs and/or objectives before making any decisions.