Turns out, the answer to money problems is not necessarily a hefty raise. New financial wellness programs help workers save and pay off debt.
Garmin International offers its employees a string of great perks, from on-site massages and free chiropractic sessions to employer-funded health coverage and a substantial 401K match. But last year, executives at the Kansas tech company saw a problem when a survey showed that a big chunk of workers weren’t investing in retirement.
Their pay was exceptional, yet still employees felt as though they weren’t managing their money well.
“They said they couldn’t afford it. They were living paycheck to paycheck,” says Stephanie Prell, Garmin’s senior benefits specialist. “And it’s a philosophy here to help our associates retire and live with financial freedom.”
Companies like Garmin are turning to a new generation of financial wellness programs that have sprung up in the past several years, promising to teach people to handle their money right now. New startups now offer financial wellness services to companies like Garmin. Companies like Ayco, Edukate, Everfi, SmartDollar and Financial Fitness offer anonymous online sessions and tools to teach people how to right their financial ships.
Going beyond the lunch and learn
A decade ago, employers would be loathe to get involved in their employees’ finances. At most, efforts might have involved a meeting in the conference room with a 401K advisor or one-on-one workshops with certified financial planners.
Yet this “lunch and learn” approach proved ineffective, and participation was typically low, perhaps 1%-2%. These often became a “how to invest” seminar, but when you don’t have money, it’s tough to consider investing. People might be embarrassed to stick around and discuss just how in debt they were. Plus, the programs didn’t involve spouses or significant others. Often, people would give up before they got started.
The idea of teaching people young how best to manage their money hadn’t seen much success either. Research has revealed that most financial classes fail to really work because often the lessons are not relevant to people at the time of the class. What’s perhaps the most useful are classes where you can apply them to real-life money situations.
Those real-life situations are indeed presenting themselves to people all over the world. Last year, consumer debt hit a record $4 trillion.
Paying off in employee health
And increasingly, that debt matters to employers, when personal financial stress leads to absenteeism, stress and distraction in the office. A survey by McGraw-Hill Federal Credit Union revealed that 36 percent of Americans spend at least two hours a day worrying about their personal finances. According to the Society For Human Resource Management, at least 83% of HR managers have said that it impacted people’s work, whether it’s stress, productivity or focus.
Garmin set out to boost employees’ financial security and help them invest in retirement. The company researched a number of these new financial wellness firms before settling on SmartDollar, which was started by bestselling financial author Dave Ramsey.
SmartDollar gives people access to 24/7 programs with videos and lessons, personalized content and emails based on their goals and assessments, and portals that protect their personal information. The price per employee — paid for by corporations — is about the cost of buying a person some pizza, says SmartDollar Vice President Brian Hamilton.
Employers can offer contests and campaigns to boost engagement and track “points” to incentivize employee progress. Companies can also get aggregate reporting on behavior change, financial turnaround, participation, engagement and progress. Since 2015, 4,000 companies started offering SmartDollar for 2 million employees, and participation has been as high as 20% to 50%. Employees on average have retired $9,000 apiece and saved $6,000 each within a year.
Employee privacy was important to Garmin, and Prell sought a service with an extra layer of security. With SmartDollar, employees’ progress is kept anonymous, yet employers are only shown overall improvement by groups of workers.
“There’s no feeling of Big Brother,” says Prell.
Debt shrinking, savings climbing, happiness growing
Garmin has been able to collect data, however, to show the efficacy of the program. So far, 15% of the company’s 4,800 employees enrolled in the SmartDollar program in October, and in just six months, 44 of those people saved $91,000 and paid off $171,000 in debt. Plus, a survey showed that the number of people who felt financially secure climbed to 12%, up from 7% during those first six months. Says Prell: “We’ve gotten nothing but wonderful feedback.”
While many employers may be hesitant to dive into their employees’ finances, the growing trend and the research shows that it cuts down on absenteeism, boosts health, morale and productivity. So it just may very well pay off—both in employee dollars and in business sense.