Building Financial Confidence: Using Employee Benefits to Boost Financial Well-Being

When it comes to our finances, many of us wish we’d learned more about money a lot earlier in life. That’s partly why November's Financial Literacy Month is so important - it reminds us that you’re never too old or too young to start learning how to manage your money or manage it better. This should start in schools, but 64 per cent of Canadians say they did not learn about money management in school. Employers are part of the equation too. By understanding the broader role they can play in employees’ financial well-being, beyond simply offering a benefits plan, employers can help their employees navigate uncertainty and plan for the future. This, in turn, benefits employers with greater productivity, lower absenteeism, stronger recruitment and higher retention.

Financial wellness is about more than retirement

We all make financial decisions throughout our lives: what we buy, whether to cook or eat out, how much of our credit cards we pay off, what subscriptions to sign up for, when we pay our bills, what activities we allow our kids to participate in, etc. But many of us weren’t taught the fundamentals of budgeting, cash flow management, debt, savings or investing, either at home or in school. How many people in their 40s, 50s or older today wish they’d known more about these principles when they were younger? In fact, 84% of Canadians believe financial education in school would have helped them manage their personal finances with less stress today, according to an Edward Jones study. So the answer is…most of us.

Employees today are navigating an affordability crisis, competing financial priorities and difficult choices about where their money goes. According to MNP, 50% of Canadians feel they are $200 or less away from not being able to pay their bills each month. Think about that: half of your workforce could be on the brink of financial crisis. This level of financial stress can affect employees in a myriad of ways: poor sleep, heightened anxiety, inability to focus, suffering relationships and higher rates of illness. For employers, this manifests as absenteeism, lower productivity, and poor retention.  

Supporting financial wellness at every stage of life

Employers don’t need to solve employees’ financial problems, but they can help make it easier for people to build financial confidence by creating an environment of support and offering resources to help employees tackle their financial stress. One way to look at it is through the lens of present-past-future. 

Present: Managing day-to-day financial pressure

One of the biggest things an employer can do to help employees manage their financial stress is to provide access to basic financial information so that they can make informed financial decisions. That includes things like understanding how to create and stick to a budget, as well as understanding how credit works and how to manage debt. This could be offered through signposting to financial literacy resources or courses, or by offering financial counselling, some of which may be available through an Employee Assistance Program (EAP). 

Of course, making support accessible needs to be paired with a culture of normalizing conversations about money without stigma. When employees feel safe acknowledging financial stress without fear of judgement, they’re more likely to seek support early, ask questions and make use of the resources available to them.

Past: Addressing financial decisions and obligations already in motion

Student loans, mortgages and other debt can compete with saving for the future. Helping employees manage their debt is one way to help mitigate financial stress and support mental well-being. One company offering an innovative solution is Marmot Benefits. They help companies offer debt repayment assistance to their employees as a part of their compensation packages. Their student loan repayment benefit directs payroll or employer-sponsored contributions towards federal or provincial student loans, while their mortgage accelerator benefit helps employees pay off their mortgage faster. Rather than matching RRSP contributions, an employer could redirect an existing matching contribution towards eligible debt repayment, where the plan permits and if the employee chooses. These options can recognize employees’ real financial circumstances without necessarily requiring an entirely new employer contribution - and allows employees to shift where the contribution goes depending on priorities. 

Future: Building long-term financial security

Building long-term financial security through workplace savings plans, employer matching, retirement planning tools and financial education not only supports employees, but it benefits employers too. Employees who are less worried about money are more likely to be productive and focused at work, and stay with their employer longer.

Helping employees understand compound growth, investment fees, contribution levels and the long-term impact of starting early can help them prepare for a better future, including retirement. Supporting employees who change job roles, move countries or need to understand what happens to their retirement savings when they leave an employer can also be useful knowledge. While it’s never too late to start thinking about money, employers can help the next generation of employees build confidence earlier. 

Financial education is part of the solution

In his disruptHR Kelowna talk, Antonio Zivanovic talks about how awareness and conversations around mental well-being have increased over the last 10 years - and suggests that “financial well-being now needs the same permission to ask for your help”. He promotes making financial well-being a visible part of your culture by giving it a name and a champion, and sharing the message that it’s ok to ask for help. He recommends making it obvious to employees that financial confidence is something your workplace can help build.

Antonio suggests starting with useful money skills. Financial literacy doesn't have to mean complicated investment strategies. Basic knowledge about budgeting, saving, debt, and diversified investing can make a meaningful difference. Employers can provide education and resources, and signpost to online calculators and other tools.

Employers should also offer financial counselling and access to trusted support - before employees reach a breaking point. Financial stress can be worse in times of general stress, such as when family members get sick or there’s been a death in the family - any time your employees’ financial situations change. Employers should make financial guidance available when life changes, but also ensure that communication about what’s available happens before something goes wrong.  

One educational resource that you can offer your employees is our blog series on Building a Roadmap to Financial Wellbeing: Part 1, Part 2 and Part 3. 

Make financial wellness part of the benefits conversation

Employers don't need to become financial advisers or take responsibility for employees’ personal finances, but they can create conditions that make financial education, support and better choices more accessible. It can be hard to know where to start; here are some helpful tips:

• Ask employees what financial pressures they are facing rather than assuming everyone has the same priorities.

• Consider whether existing benefits and programs address financial well-being, or whether there are gaps.

• Explore options that give employees choice, including flexible savings arrangements and debt repayment support.

• Communicate what is available and how to access it. A resource employees don't know about won't help them.

While we can't go back and give ourselves the financial education we wish we'd had, employers can give today's workforce more ways to navigate the financial realities they're facing.