10 Reasons Why You Need a Financial Wellness Program

The idea of providing a financial wellness program to employees seems like a recent development, but it reaches back already several generations. The great change in financial wellness programs of the 2020s will require CEOs and HR directors to move beyond the notion that a financial benefits program involves the sole offering of retirement account contributions. In the wake of the Great Recession and the COVID-19 pandemic, employers are recognizing the value of adding personal financial services and products to their employee benefits packages, not only as a way of attracting and retaining the best talent but also to support their employees in reaching their personal goals that turn them into loyal, long-term staff members.

Why should you add a financial wellness program to your benefits package?

Financial wellness benefits packages are much more than feel-good add-ons to employee health insurance. These programs promote greater employee stability, productivity, and loyalty while reducing the time employers spend on garnishments and paycheck advances all at little to no cost to the employer.

Additional food for thought: while previous generations would likely have appreciated personal financial services in their employee benefits packages, the sheer size of the Millennial generation means that they have the power to exert pressure on the workplace to provide options they find attractive. As Millennials have moved from the dorm room to their parent’s basements to apartments and now into their own homes, employers are seeing the value of offering financial wellness programs that attract and retain skilled and dedicated workers.

Here are 10 reasons why CEOs, HR directors, and other company decision-makers should add an employee financial wellness program to their benefits packages, going well beyond a mere 401k investment option.

Improved employee productivity

Number one on most employer lists of positive results stemming from financial wellness programs is the bump in employee productivity that a well-rounded financial wellness package can provide. In addition to retirement account options, a program that offers budget counseling, credit building assistance, debt reduction programs, student loan repayment support, home ownership preparation, and even options for basic banking will allow the employee to prevent or minimize personal financial hardships along with the distractions they create.

Comprehensive financial wellness programs reduce the disruptions of the employee’s time due to concerns over debt, such as collection agency calls, extended breaks to take care of missed credit card payments, and extra days off to deal with poor credit scores when looking for appropriate housing.

Moderated Employee Stress and Improved Health

This one appears so obvious that we too often overlook it. Surveys regularly show that finances are the leading cause of stress for Americans, above family obligations, health, and even work. While sweaty palms and increased heart rates might be symptoms of situational stress, chronic stress leads to increased fatigue, an inability to concentrate, heightened irritability, not to mention the physical manifestations of headaches, and greater susceptibility to serious diseases. Additionally, many employees with chronic stress turn to very unhealthy habits as coping mechanisms, such as smoking, overeating, and drinking. When we consider our physical and psychological reactions to stress, it is no wonder employers are turning to financial wellness programs to help their employees minimize and eliminate financial stress. For employers that offer health insurance plans, financial stress is no longer a personal matter since its consequences can lead to an increase in plan premiums.

Increased Employee Satisfaction

Employees report greater personal and professional satisfaction when they have access to tools that help them set and achieve personal financial goals, including building an emergency fund, preparing for vacations and holidays, paying off student loans and consumer debts, and contributing to an investment plan.

An employee who prepares financially for expected and unexpected eventualities will exhibit greater engagement at work with less worry about their finances. Conversely, employees who regularly borrow money because their spending and their bills amount to more than their income will report much greater dissatisfaction with their job.

Greater Employee Longevity and Retention

By offering financial wellness programs that include budget counseling, credit building, and debt reduction services, employers are helping their employees to build more stable and secure financial lives. One likely result is an increase in homeownership among employees, which, in turn, leads to greater longevity in the workplace.

It makes sense when you think about it. Most financially stressed individuals believe that greater income (not controlled spending, despite its principal role) will solve their financial problems. Finding another job seems most likely to result in increased pay.

Reduced Paycheck Garnishments

When employees regain control of their finances through healthy financial habits such as budgeting and the appropriate usage of credit and debt, they are less likely to overextend themselves with a large car loan, truck loan, or other personal loans. Too often, such situations result in a court judgment against the employee, whose wages are then garnished by the creditor. Garnishments require extra time and effort on the part of human resources to process, decreasing their own productivity.

An ADP study found that nearly one in fourteen employees had a garnishment on their paycheck. For a small business with 100 employees, that means the HR department has to deal with seven or eight employee wage garnishments at any given time. Just under half of these garnishments resulted from non-payment of child support obligations, but the rest involved consumer and student loan debts. Financial education and services help employees address the causes of their debts so they are less likely to encounter the same issues again.

Fewer Payroll Advances

Similarly, improved personal finance behaviors among employees lead to fewer payroll advances, saving HR time and lost productivity. Managing payroll advances may or may not be time-consuming in your organization, but they can feel disheartening and even embarrassing for employees. Financial wellness programs need to promote basic personal finance habits that minimize the chances that the employee will need a payroll advance.

Some employers mistakenly believe that the recent rise of payroll advance services, often paid for by the employee, will resolve this issue. Unfortunately, the truth will come out soon enough. The problem is not with the time of the month when the paycheck arrives. The problem rests with the reality that too many employees incur bills and spend money at a higher rate than they earn money.

Fewer 401(K) Loans

Even more costly than payroll advances, loans against the employee’s 401(K) savings can lead to frustrating scenarios for the employee. An NBER study found that one in five current employees with a 401(K) plan at their place of employment has an outstanding 401(K) loan. That’s 20%!

For the employee, once fees and interest start to add up, the employee may need to supplement his or her income by seeking additional employment or a higher-paying job elsewhere.

Even more disturbing, 86% of the 21% of employees with a 401(K) loan will leave their place of employment still owing money on the loan. Many of them will never repay those loans, meaning they have reduced their retirement fund, incurred early taxes, and likely been charged a penalty fee for accessing those funds before age 59½.

Stronger Employee Recruiting

In times of low unemployment or other difficulties finding qualified applicants (e.g. the COVID-19 pandemic), employers seek all available options to attract and keep the best talent. A 2018 Harvard Kennedy School study found that the cost of losing an employee and having to train her or his replacement equates to 16% to 20% of the position’s annual salary (p. 12).

Benefits matter to a lot of job seekers who understand the value of good health insurance. Additionally, companies show they value potential employees through their willingness to provide support for the employee’s personal financial life. Feeling valued is a common job requirement among Millennials.

Reduced absenteeism

One result regularly noted in studies on the impact of financial wellness programs is the decrease in employee absenteeism. Employees are not going to miss work because they are researching the best stock to add to their 401K plan. However, if their car is being repossessed, if their bank has frozen their account for an overdraft, or if they need to seek a new apartment because their rent payment bounced, they will probably miss at least a half if not a full day or two of work. Debt management, budget counseling, and bank account education can help minimize such scenarios.

Employee Loyalty and Commitment

What good does it do to offer paid vacation days if the employee is not able to afford travel because, like 60% of the US population, they have not progressed beyond the paycheck-to-paycheck subsistence level? Offering a financial wellness program that promotes the centrality of saving for emergencies and short-term goals, in addition to the important long-term investment opportunities, allows the employee to develop healthy financial habits that will permit him or her to take advantage of other benefits. An employee that can afford to enjoy a vacation or two each year will be much more likely to stay loyal and committed to the employer that helped them get to that point.

Whatever the reason or reasons you choose to add a financial wellness program to your employee benefits package, the great news is that you open yourself and your company up to benefit from all the reasons listed above. In a world whose short-sighted views on the housing bubble and related investments led to the Great Recession, isn’t it about time your company took the long view of helping your employees to a better place financially? It will only result in helping them become better employees.

Related Questions

How expensive are employee financial wellness programs?

While some financial wellness benefits programs will charge the employer a per-employee fee, others – particularly those offered by nonprofits – come with no costs to the business. Unless the program involves substantial one-on-one counseling, you should avoid services with fees.

How much time do employee financial wellness programs take to set up?

Employee financial wellness programs that require each employee to sign up and sign various privacy and disclosure forms can take months or even a year depending upon the company size. Those that simply involve the addition of an intranet portal can take as little as an hour to implement.

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You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
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  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
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Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
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You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).