What is financial wellness?
Financial wellness is the ability of individuals to manage daily finances while setting short- and long-term saving goals so that they can invest in a secure financial future.
In our view, short-term barriers such as debt or a lack of emergency funds can prevent investors from reaching long-term goals, including saving for college and retirement. For many, it makes sense to get their immediate financial situation under control as part of developing a successful, long-term financial strategy.
Financial wellness is the result of healthy saving and investing behaviors that are attainable and maintainable over time.
Why Financial Wellness Is Important for Employers
Today’s employers are competing to attract and retain qualified employees, endeavoring to keep their workforce focused and productive, and managing limited resources for employee benefits, all while trying to remain competitive in a global economy.
In this challenging environment, employers are taking note of employees facing financial difficulties and drawing connections between employees’ finances, overall health and wellness, and job performance. Research shows that financial stress takes an emotional toll; it can adversely affect physical health and well-being, as well as productivity.
- 64% of U.S. workers say finances are their main source of stress1
- 28% of Americans age 25 and older say they have less than $1,000 saved outside their workplace savings plan2
- 70% of human resources professionals surveyed say that financial problems impact employee performance3
While increasing employee engagement and retention and possibly improving the retirement-readiness of their workforce are some outcomes employers could expect from providing greater financial wellness support, 85% of employers polled in a recent Aon Hewitt study5 said providing employees some type of offering around financial wellness is also "the right thing to do." Financial wellness programs offer solutions for employees to create capacities for managing their everyday finances and saving beyond their workplace savings plans. Read more...
This article has been prepared by T. Rowe Price for informational purposes only. T. Rowe Price (including T. Rowe Price Retirement Plan Services Inc., its affiliates, and its associates) does not provide legal or tax advice. Any tax-related discussion contained in this article, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this article.
T. Rowe Price Investment Services, Inc.
1 2014 American Psychological Association’s "Stress in America" Survey
2 EBRI 2015 Retirement Confidence Survey, based on Americans 25 and older
3 SHRM 2014 "Financial Wellness in the Workplace Survey"
4 Aon Hewitt 2016 "Hot Topics in Retirement Study"