Companies Establishing Financial Wellness Programs

An increasing number of companies in Corporate America are doing their part to help employees make smarter spending decisions by offering more financial wellness programs than ever before.

Financial advisors Waddell and Reed define financial wellness as “the ongoing practice of striking a balance between living responsibly today and planning wisely for tomorrow.” Studies have shown that many consumers just do not know how to manage their money or take responsibility for their spending habits; many feel that if they ignore the problem, it will simply work itself out or somehow disappear.  Tossing out unopened credit card bills and financial statements, or simply letting the bills pile up to be dealt with “later” are surefire ways to get into serious money trouble.  When some folks find themselves caught in an endless cycle of trying to dig out from under their mounting debt, it’s easy to panic, make minimal payments hoping that will pay off the balance, or simply give up and succumb to debt collectors.

Employers across the country have been hearing employees’ concerns about personal finances.  Some were asking to work from home in order to save gas money.  Others were asking for raises or trying to come up with new ways to cut back on their spending.  Employers finally caught on—the problem was not how much the employee was earning; it was how they were managing what they were earning.  It was clear that many folks were clueless when it came to responsible financial management.  Rather than give raises (which could just lead to folks managing more money irresponsibly), companies started to implement ongoing financial wellness seminars to help their associates take control of their spending.

Many companies already offer physical wellness programs with various components that associates can use to help improve their physical health.  Managers and human resource directors were realizing that the stress of their financial situation was taking a toll on associates’ physical well-being.  It wouldn’t seem that there would be an immediate connection between a person’s physical health and their financial status, but it turns out the two are more closely related than most realize.

Financial wellness programs focus on different areas, depending on the company.  Some directly correlate financial and physical wellness; for example, the facilitator will show just how expensive a habit like smoking is, and how those dollars could be better spent.   This information might just convince the smoker to either reduce or quit their habit.  Others focus strictly on the financial component and offer steps for better money management.  Depending on the program’s focus, the company might have an on-staff associate lead the session, but for straightforward financial sessions, usually a professional financial advisor is brought in.

The advisor also typically discusses:

• Developing a budget.  The basis of all responsible financial management starts with drawing up a realistic budget.  From here, it’s easier to see where expenses can be reduced or cut.

• Relying less on using credit cards for purchases.  More folks are using cash and easing out of their credit card dependence. A good financial advisor (or credit counselor) can help make this transition easier.

• Smart investing. A financial advisor can explain the difference between various retirement accounts, CD’s, and mutual funds.

• Developing a long-term savings plan. It’s never too early to start planning for the next phase of life.

• How to set realistic financial goals. Most goals can be set by asking yourself a few questions—“Where would I like to spend my money?”, “How can I fix my past financial mistakes?”, “What would I like to be doing in five or ten years?”  The advisor can then help you plot out what you need to do to reach those goals.

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This entry was posted on Thursday, February 18th, 2010 at 9:00 am and is filed under Debt & Consolidation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.