Financial wellness is not just a trend but a way of thinking about money that recognises the various pressures and stresses most people experience. In an increasingly complex financial world, it is essential to find new ways of measuring and monitoring the challenges people face in managing their money so that you can support them as an employer. 

Financial wellness is an umbrella term for initiatives that help consumers manage their money better, plan, and reduce their debt or loan payments. In other words, it’s about empowering people with the knowledge and tools they need to succeed financially so they feel more confident, less stressed, and more economically stable. Whether you’re looking to build your own financial wellness program or partner with a Financial Wellness Provider, this article will give you everything you need to know about measuring success and tips on making sure the program thrives long-term.

Why is measuring success so important?

Firstly, it’s important to remember that you cannot solve the financial well-being of people; you can only provide them with the tools to empower themselves. Therefore, you need to ask employees which tools they want. Otherwise, you might provide them with the wrong ones.

Secondly, you won’t know the success of the tools you buy if you don’t measure them on an ongoing basis. You could have the right tool but the wrong roll-out. But unless you measure, you won’t know. 

Thirdly, financial well-being is not a ‘nice to have’. It’s an area that affects the operation of your entire business because when people are preoccupied with financial stress, their productivity drops.

How to measure the success of financial wellness programs?

There are one of two methods of measuring financial wellness. Firstly, ask staff directly using a workplace financial well-being survey. These surveys give you direct, actionable data on what employees want, how they’re doing financially and the impact at work.

The second is using proxy metrics (many of which you already measure) to validate or weaken insights you get from your survey to drive the most appropriate action. These include retention, absenteeism, and pension contributions.

What metrics should be used in the measurement?

• Staff retention data: Retention is an excellent measurement to use because you probably already measure it and have the data on hand. Considering turnover can indicate how staff feel about their employment, this suggests that staff with access to financial well-being benefits can reduce turnover.
• Absenteeism: Stress – including financial stress – is correlated with absenteeism, so higher-than-average absenteeism can indicate acute economic anxiety or chronic financial stress causing a breaking point.
• Pension fund contribution data: Changes to pension fund contributions can signify that staff are feeling the pinch.  

Tips to help your financial wellness program succeed

Clearly define what you mean by financial wellness. Doing so will help you understand your goals for the program as well as the needs of your participants. It will also help you determine what metrics to track. 

Have a strong partnership with your members and key stakeholders. This will help you gain support for your program and the resources you need to succeed.

Conclusion

Financial wellness programs aim to empower people with the knowledge and tools to succeed with money, so they feel more confident, less stressed, and more financially stable. 

To measure their success, we need to understand what people need and want from these programs and what metrics we can track to measure their progress. Measuring success is essential because it helps us understand our programs’ effectiveness. It will also help us determine what areas need improvement so the program can continue to serve people effectively. 

With a clear understanding of financial wellness, you can better design and implement a program that delivers people’s desired results.

Managing and maintaining your financial health can be less than pleasant, especially because spending is more satisfying than planning. However, it’s important to remember that financial wellness is one of the defining factors of your life’s success. 

You can understand financial wellness as the ability to meet current and future financial obligations. When you have a low financial wellness score, you’re more likely to be under strain and experience stress. There is no set monetary amount to achieve financial wellness. Instead, it is tied closely to your financial stress and financial confidence.

In a 2019 PWC Employee Financial Wellness Survey, the report found that only 44% of employees feel that their employers care about their financial wellbeing. With numbers like this and the continued decline of financial well-being amongst employees, it’s clear that organisations and employers need to improve.

We’re sharing five pillars of financial wellness that you can use to guide your financial well-being journey.

1. Managing Money

Managing your funds is done in many ways and has no quick solution. Depending on your spending habits, you can adopt several strategies to help you manage your money. These strategies include:

• Budgeting: Budgeting helps you control your spending habits
• Spend tracking: Spend tracking gives you insight into whether you are overspending on unnecessary expenses
• Paying off debt: Paying off debt gets you one step closer to financial freedom
• Saving: Putting away a little every month helps you save to afford the lifestyle you want

2. Earn Money

Earning money is another significant part of financial wellbeing. There are several ways in which you can earn sustainably. Sustainable earning is key because earning on a non-regular basis is very common but inefficient. There are two main ways to earn and achieve financial wellness:

• Passive income: Generating income through passive means such as rental income, sharing your interests online via blogs, social media, and more to build up a following which can be monetised, etc. This is income that you don’t physically have to log hours to earn revenue.
• Active: More like the regular 9 to 5, which we’re all familiar with, you perform a service to receive compensation.

3. Grow Your Money

This is quite different from earning money. Growing your money can be done through saving and investing. Saving can be done automatically by keeping part of your income every month. Investing is done through retirement funds, unit funds, dividend stocks, etc.

Though there may be many ways to grow your money, there are three aspects to keep in mind:

• Be consistent
• Be intentional
• Be committed

4. Smart Borrowing

To borrow is to use certain forms of finance, such as using credit. When done responsibly, it can benefit you in the long run, such as when you are establishing a credit record. You need to avoid overspending and build a good payment history to borrow effectively. This means:

• Only borrowing what you can afford
• Making payments before the due date
• Not opening too many credit lines
• Not closing any outstanding credit lines

5. Protect Your Money

Protecting your money is something that should be taken seriously. Getting insurance is an effective technique for protecting your money. Insurance allows you to have peace of mind in exchange for you paying a monthly premium and receiving protection for your financial losses. 

Some other ways to protect your money are:

• Creating solid passwords for your financial accounts
• Only financing with accredited banking services
• Using your personal computer for your financial management

Remember, financial wellness doesn’t just happen. It’s a conscious effort that is reinforced with intelligent decision-making. Partnering with SmartAdvance can help you find the key that unlocks the door to financial wellness. If your employer is not yet signed up with SmartAdvance, please send your manager or HR team the link to our website at www.smartadvance.co.za