The term “financial wellness” appeared a few years ago, and has been winning increased acceptance among employers. Employers recognize that good personal finance habits amongst employees are as important as healthy eating and exercise.
Yet what exactly does “financial wellness” mean? It’s a vague term that is a catch-all for just about anything with a dollar sign involved.
The Employee Benefit Research Institute conducted a survey about a year ago in which employers could not even agree on exactly what the term meant.
- 34% defined it as “having access to assistance and resources that enable good financial decisions”. This definition is even more vague than the term itself!
- 30% defined it as, “being comfortable/financially secure overall”. This is somewhat helpful because it speaks directly to individual workers and how they feel. We all have different ideas of what “comfort” and “security” may mean to us, but at least these are concepts that enjoy common denominators.
- 21% defined it as, “being equipped to achieve retirement security through planning and saving”. This is highly specific and helpful. However, it speaks to the future as opposed to focusing on the present, and how workers live now.
There’s another problem regarding “financial wellness” and that’s that only 23% of employers, according to the same survey, even utilize financial wellbeing metrics with their workforce. PayActiv believes that this low percentage is due to the very fact that “financial wellness” is not clearly defined. How can you measure what you can’t clearly define?
On the employee side, there is also a wide disparity in regard to definition. PwC’s 2019 Employee Wellness Survey asked employees about the definition of financial wellness.
Here’s how the answers stacked up:
- 34%: Not being stressed about my finances
- 18%: Being debt free
- 16%: Having enough savings that I’m not worried about unexpected expenses
- 16%: Financial freedom to make choices to enjoy life
- 12%: Being able to meet my day-to-day and monthly expenses
- 4% : Being able to retire when I want to
Notice that employee definitions are not only widely varied, but are highly specific and address the here-and-now.
This highlights yet another problem with “financial wellness”, in that there appears to be a dislocation in how employers and employees even think about the term, and what it means.
PayActiv is striving to bridge this divide, so everyone can talk about this important topic from the same frame of reference.
We believe that all of the above answers regarding the definition of “financial wellness” derive from 3 simple concepts that everyone can relate to, and what PayActiv’s values are:
- Help employees live the lives they’ve earned
- Help employees fully participate in the economy they helped create
- Help employees be helped through the ups, downs, and unknowns of life
How does PayActiv accomplish this? With earned wage access and all the other tools of our smartphone app. By letting employees access money they’ve earned when they need it, having access to free financial counseling, access to bill pay, and our other services, all three of the above-stated values become reality.
This reality encompasses everything employees said they want from “financial wellness” – from not being stressed about finances to being debt free to meeting expenses – to the responses employers gave, as well.
The key to understanding the true meaning of “financial wellness” is rooted in PayActiv’s core belief: that people and economies flourish when everyone is able to fully participate. We begin by thinking about how we feel today, and what we aspire to feel each morning to come.
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