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Employee Financial Wellness: Why Should You Care?

How and why employers should support the financial education and wellness of their workforce

Christina M. Moran, Ph.D
Industrial/organizational psychologist with 17 years experience in HR and leadership
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One of your colleagues seems to be continuously challenged. Their car is in the shop a lot, causing them to be late for work. Their clothing and shoes seem quite worn. A noisy neighbor keeps them up at night, but they can’t afford to move. They just can’t seem to catch a break.

It is not a company’s obligation to remove every obstacle in an employee’s life. However, organizations can spark meaningful change in this area— change that can help employees and the collective organization.

This article looks at ways an employee’s financial challenges can be, at least, partially mitigated with education in financial wellness, as well as employee financial wellness platforms. Often, this lies in promoting practices that don’t detract from employee financial wellness.

In This Article

Though no one’s life is without hardships and challenges, wealth is unquestionably a means for taking control of them. Access to wealth means a person can create a favorable environment and reduce or eliminate many of life’s obstacles.

Lack of wealth creates a myriad of daily challenges that directly affect employees, negatively impacting their mental health and performance at times. How can companies support individuals, like your colleague, who would perform better if their financial stress were reduced? And, when it comes to it, how involved should employers be in the financial wellness of their employees?

What is Employee Financial Wellness?

Before diving into actionable paths forward, let’s discuss what employee financial wellness means.

As referenced above, it is not the obligation of employers to remove every obstacle in their colleagues’ lives, financial or otherwise. However, a basic level of financial wellness provides a foundation. In a financially stable milieu, the employee can be better positioned to work toward their professional potential.

Foundational Components of Financial Wellness

What are the foundational components of financial well-being to you? A secure financial situation is relative, encompassing certain things for some people but not for others. People may have varying definitions based on their individual financial goals.

For most people, the idea of financial health at a baseline level would likely include the items below, in addition to others that may come to mind for you.

  • Reliable, efficient, and cost-effective transportation
  • Access to affordable, quality, unprocessed food
  • Access to medical care at a manageable cost
  • A safe, functional place to call home
  • Access to clean water within the home
  • Access to clean, presentable, and weather-appropriate clothing and apparel
  • Access to community resources and societal support programs

In addition, in a corporate or professional environment (especially with remote work privileges), the list of expectations likely grows to include:

  • Access to a reliable and affordable Internet connection
  • A bank account
  • An environment conducive to getting quality sleep
  • Previous experience with technology as part of day-to-day life
  • A basic understanding of professional etiquette and “unwritten rules”, which is more likely to be gained as one’s income level increases
  • Reliable and high-quality dependent care for those with caregiving responsibilities

Let’s look at a practical example of safe, adequately maintained housing for your colleague. If your organization isn’t in the business of providing shelter for individuals without housing, you might wonder whether helping your employees address this is within your responsibilities.

I would assert that, again, it is not your obligation. But I would also note that your colleague may better concentrate on work and make a greater contribution to the organization if they had a permanent, safe residence. If they perform well at work, a promotion and higher income would be a greater possibility than if they don’t. Thus, these dynamics work in cycles.

For an individual to move from a cycle that is stacked against their ability to perform well to a cycle that could compound into greater job performance, then greater financial wellness, and so on, is a monumental task. We must recognize the difficulty in this, and the various factors that contribute to a cycle of poor financial wellness.

The Cycle of Employee Financial Wellness.

Contributors to Poor Financial Wellness

Poor financial wellness can be attributed to a combination of various things both in and out of a person’s control. Here are some common factors that contribute to poor financial wellness:

Lack of financial education: Many individuals never received adequate education about personal finance, budgeting, saving towards a financial goal, financial products and services, and investing. On the contrary, a person who comes from a background where financial illiteracy was common may have a skewed perception of responsible spending.

High levels of debt: Accumulating excessive debt, such as credit card debt, student loans, or personal loans, can lead to financial stress and hamper long-term financial stability.

Impulse spending and poor budgeting: Failing to create a budget or giving in to impulse purchases can lead to overspending and difficulty managing finances effectively.

Lack of emergency savings: Without an emergency fund, unexpected expenses like medical bills or car repairs can easily create a financial crisis—often leading to more debt.

Unplanned major life events: Life events like divorce, parenthood, serious illness, or the loss of an earning partner who had no life insurance can have a significant financial impact, especially if there is no contingency plan in place.

Lack of insurance coverage: Insufficient or lack of insurance coverage for health, life, home, car, or similar assets can leave individuals vulnerable to unexpected financial burdens.

Ongoing poor health: Healthcare for chronic issues can be a major and unavoidable financial burden.

An employee at this laptop but unable to focus on work due to financial concerns.

Where Do Employers Come In?

Most organizations are driving toward a handful of key metrics. These often take the shape of growth, profit, revenue, and other key financial indicators that are used to signal the “health” of the business. Naturally, organizations seek to maximize the value of their enterprise.

Doing so without spreading that mission throughout the organization and to individuals’ financial mindsets can yield a disconnect that puts strain on the business.

Let’s Flip the Script for a Minute

Before we discuss how we can take steps forward in this area, let’s play out the opposite scenario.

Let’s imagine that organizational leaders take a strong stance that employee financial wellness is entirely their own responsibility. The company shouldn’t and won’t play a role in supporting it.

What is likely to happen?

Well, a number of scenarios could occur. For one, employee retention becomes a problem. Employees with financial challenges could quit because the barriers to working at your organization are too significant (e.g., transportation, dress code expectations, finding dependent care, etc.).

Another possibility is that individuals grappling with financial wellness could struggle to be consistent performers due to the obstacles they’re constantly battling. The unpredictable way those obstacles impact their lives could lead to absenteeism, low employee engagement, and/or poor performance.

Some other likely possibilities include:

  • Tension around employee compensation, with frequent requests for raises, advances, or similar financial outcomes.
  • Increased medical costs from direct (e.g., food quality) and indirect (e.g., the stress of financial instability) causes.
  • Biases from others in social interactions throughout the organization— these could translate into actual perceptions of performance, advancement opportunities, and the like.
  • A struggle to take advantage of opportunities to enrich the employee experience and wealth creation opportunity by investing in a 401k, participating in philanthropic efforts, attending after-hours work events, and so on.

Again, many of these items show up in some way across a wide variety of employee populations, though one could argue they are more prevalent when employee financial wellness is out of reach.

When you empower employees in terms of financial wellness, it reduces the likelihood of these scenarios. By extension, you’ll also offer a better employee experience, boost the overall well-being of your staff, and create a working environment where people can progress both in their careers and personal goals (moving to a safer place, owning a car, owning a home, etc.).

An employee receives praise from colleagues at a work meeting because they are able to perform well thanks to the guidance offered by a financial wellness program.

So, What’s the Path to Employee Financial Wellness?

Employee financial wellness helps remove barriers to job performance, which impacts organizational performance, enhances employee culture, and reinforces a collaborative and constructive culture.

There are two primary levers employers can use to enhance employee financial wellness.

1. Review Compensation and Total Rewards Policies

Having a strong, defensible, and consistent compensation philosophy is critical to ensure equity and minimize bias in the compensation process. Paying people accordingly is an obvious component of employee financial wellness, but it’s not the only consideration.

2. Provide Financial Coaching

Another prong of a strong approach here is education. What employees do with their paycheck after it comes to them is their decision. However, as the old saying goes, “When you know better, you do better.”

For some individuals, education about maximizing their earnings both short-term and down the road would yield a meaningful impact.

At our organization, we talk about things like “value creation” and, instead of a “get rich quick” scheme, a “get rich slow” plan. Any approach that promises to turn a dollar into two overnight is worthy of suspicion. However, it’d be shortsighted to expect that people who never had the luxury of saving money would know best how to save money once it becomes available.

What to Cover in Employee Financial Wellness Programs

All of us can likely remember at least one financial lesson we learned the hard way.

Whether it was neglecting to estimate medical costs, miscalculating taxes, or some other reason, we all have a story to share. What blew our minds in these stories is that others expected us to have information we didn’t, and our lack of understanding cost us real dollars.

Financial literacy comes through learning these lessons directly, by losing our own money, or from a trustworthy source. In the case of the latter, the lesson is learned without financial loss— a much-preferred scenario.

As such, here are some recommendations of topics to cover that (either directly or indirectly) support employee financial wellness:

Health Insurance Plans

  • The benefit of core [medical] and ancillary [dental, vision] plans.
  • The differences between in-network vs. out-of-network plans.
  • Estimating healthcare costs.
  • What questions to ask before incurring treatment.
  • Pre-authorizations to obtain to minimize out-of-pocket costs.
  • Minimizing prescription costs.
  • How to be an educated consumer of medical care.

Tax Planning

  • How many deductions to take.
  • Estimates of taxes in different brackets and locations.
  • Planning ahead to file taxes on time.
  • Key documents that are needed.
  • What to look for in a tax advisor.

Retirement Planning

  • How to maximize any employer-offered retirement savings plans, matches, and vesting schedules.
  • Comparing non-employer offerings.
  • Engaging with trusted financial advisors.

Credit Scores

  • Factors that affect a person’s credit score.
  • How individuals can increase their credit score.
  • The impact of good and bad debt.

Caregiving Support

  • Tax-free savings accounts that can go toward dependent care.
  • What to look for in dependent care providers.
  • Trusted resources.
  • Community and nonprofit support.


  • How to divide up one’s paycheck across bills, necessities, and wants.
  • Cultivating a habit of saving for the future.

Debt Management

  • The cost of compounded interest.
  • The long-term difference between low and high-interest debt.
  • The difference in real spending between buying with cash or on credit.
  • Setting up a financial plan to pay off student debt, loans, or credit card debt early.

Community Resources

  • Programs offered through external partners that can support you and your colleagues on their financial wellness journey.
An HR leader presenting workplace training to educate employees on financial wellness.

Setting Up a Financial Wellness Program for Employees

Just like with any other form of employee benefits, offering financial wellness benefits will take serious consideration and ongoing input from all stakeholders. Here are a few considerations to get you started.

The Financial Coaching Employees Need

Coaching someone on investment opportunities when they’re struggling just to get through the month is futile. Start with where your employees are at in their financial education. A good way to determine this is through an anonymous survey.

Accessible Resources

Consider and remove any barriers that could prevent employees from benefiting from financial wellness initiatives. Financial coaching should happen during work time. If you have a remote team, offer webinars on financial planning.

Provide access to financial wellness solutions such as budgeting apps and financial advisory services as part of your employee benefits package.

Financial Wellness as an Organizational Priority

Much like you would have in-house drives that focus on employee well-being, you can make financial well-being part of your values. You could, for example, have drives to make employees aware of compliance and deductions around tax season or provide cost-saving benefits like dental plans and on-site childcare.

By its nature, providing insurance benefits, such as health insurance and disability insurance, also buffers the financial wellness of your employees and their direct dependents.

Infrastructure to Support Financial Wellness

Running an effective financial wellness program is a considerable undertaking for which your company and human resources department will need some support.

Investing in a good employee financial wellness platform means your employees automatically have access to financial counseling and advisory services, educational resources, and various financial and budgeting tools. The best employee financial wellness platforms offer easy-to-use dashboards that can be accessed via mobile, so employees who are not desk-bound benefit equally to those who are.

Employee Assistance Programs

The financial issues employees face can arise from a larger core issue. For example, it can be the symptom of an elderly dependent who needs ongoing care, a health problem such as an addiction, or it can stem from an unstable domestic situation.

Providing access to an employee assistance program (EAP) means employees can get interventionist help and ongoing support through referred counseling or mental health care.

Key Takeaways

Employee financial wellness is not necessarily your obligation as an employer. That said, we should acknowledge the role that organizations can have in supporting their colleagues’ financial wellness and the societal impact that these efforts can have.

An important first step in this conversation is understanding the breadth of challenges that a lack of financial wellness can bring. From there, employers can determine the issues of greatest importance to their teams and develop an education plan to support their colleagues in taking steps forward.

All of this must be built upon a foundation of a thoughtful compensation structure in order for educational and behavioral interventions to have a meaningful impact.

Christina M. Moran, Ph.D
Industrial/organizational psychologist with 17 years experience in HR and leadership
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Dr. Christina Moran is a licensed Industrial/Organizational Psychologist and works as part of the leadership team at ThenDesign Architecture. An energetic strategist and executor, she has demonstrated exceptional results in a variety of areas including people leadership, business operations, organizational effectiveness, marketing, international account management, and analytic modeling.

Her career has spanned consulting, business leadership, academia, athletic and performance domains, and nonprofit direction. An evidence-based thought leader, Christina's research has been published in a number of top-tier peer-reviewed journals in the field. Christina obtained her doctorate and master's from the University of Akron's nationally ranked industrial/organizational psychology program and her bachelor's of science in psychology with a minor in Spanish from John Carroll University. She is licensed to practice psychology by the state of Ohio.

Featured in: Harvard Business Review ScienceDirect

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