Financial Wellness And Why It Matters In The Workplace
/On April 19, under the Aries sun, I published my first book on financial wellness. The book is entitled, Financial Wellness in the Workplace, and it is an introductory look at the impact of financial health on the mental health employees. For all my Money & Mimosas readers and paid members, don’t worry, my next book will be for self-employed folks.
I started with employees because the connection between health and wealth is still a new conversation in the workplace. As entrepreneurs, we have learned that wealth and wellness are inextricably connected. However, and unfortunately, after working with my co-host of the Going from Broke TV series (a CEO of a publicly traded company and a total asshole), and talking to a number of C-suite folks at various companies, it became clear to me that this truth is lost on them.
In my book, my thesis is that corporations should provide financial wellness benefits so that employees can reduce financial stress and experience a higher quality of life. Financial wellness, especially when offered as a holistic program in the workplace, can help employees find balance and control over their finances throughout their lifetime.
I remember a time when mental health was rarely discussed in the workplace. It was not only taboo, it was also considered to be a “personal” problem to be dealt with at home and not in a professional space.
Thankfully, we are collectively recognizing that mental health is a conversation that needs to be had in the workplace and resources need to be made available to employees.
As we unpack the root causes of what many are calling a mental health crisis, it is abundantly clear that financial health is one of those driving forces.
The impact of financial stress
Financial stress, regardless of income level, is a common experience for employees. Although a company may compensate its employees well, the rising cost of living combined with stagnant wages and salaries is placing a crushing burden on families. Organizations are beginning to offer financial wellness benefits to address financial health challenges. These resources are meant to help employees make informed, financially healthy choices as they plan for purchasing a home, prepare for their children’s college costs, their own retirement, and many other financial decisions that they face on a daily basis.
Financial stress, financial anxiety, and financial trauma are very real psychological issues that impact an individual’s mental, physical, and spiritual health. It goes without saying that financial health is one of the critical first steps in any individual’s ability to feel safe and to thrive. From an organization's viewpoint, financial stress reduces productivity, focus, and morale. All of which negatively impact the bottom line.
My intention for writing this book was to make it crystal clear that financial health and mental health are inextricably linked. We can no longer ignore the blatant signs that a mental health crisis has been brewing under the surface for quite some time. It is imperative that we roll up our sleeves and get to the root cause of why a growing number of employees in the United States are emotionally, psychologically, and spiritually suffering. The root cause is a tangled web of many factors. One of those factors is financial stress.
What is financial wellness?
The definition I prefer to use for financial wellness is the “actionable steps one can take to elevate their financial health”.
Financial health, as defined by the Financial Health Network, is “the dynamic relationship of one’s financial and economic resources as they are applied to or impact the state of physical, mental and social well-being.” One’s financial health is scored as vulnerable, coping, or healthy.
Financial well-being, as defined by the Consumer Financial Protection Bureau, “is a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life”.
Financial wellness and financial well-being are often used interchangeably, but they do have a slight distinction. The former denotes action steps, while the latter denotes an emotional state. To use a physical fitness analogy, it would be akin to saying that financial wellness is like yoga classes, yoga mats, yoga blocks, yoga straps. While financial well-being is the inner peace one feels after taking a yoga class.
With that said, it's not a big deal if you mix up financial wellness with financial well-being. They are often confused and honestly, before writing this book, I would use them interchangeably.
Why does financial wellness matter?
The untethered rise of financial stress and its detrimental impact on mental health has put our society on a fast track to a psychological crisis unlike we have ever seen before. And the only solution is to course-correct by making financial wellness a priority in all areas of society. Since companies are the primary source of income for employees, then logically it makes the most sense for them to also be the primary source for financial wellness resources.
The impact of poor financial health can be felt across socio-economic backgrounds. Employees, regardless of income, face financial challenges.
For some, these challenges mean they are forced to make choices that lead them further into financial predicaments such as taking out high-interest loans as a way to pay off current obligations. Thereby, creating a vicious cycle of financial crisis after financial crisis that can be impossible to escape.
For others, these financial challenges mean they are forced to play a never-ending game of juggling the financial balls of child care costs, future educational costs, and expenses related to aging parents.
And yet for another group, it could mean trying to navigate their stock options and how to create sustainable wealth for their family while remaining at your company.
Whatever form it takes, financial health is a key component of every employees’ life.
According to the Financial Health network, there are three main categories to define one’s financial health. They are as follows:
Healthy: Individuals exhibit positive financial behaviors that will allow them to be resilient and on track for long-term financial success.
Coping: Individuals exhibit some positive behaviors but also experience challenges that require significant behavioral change to reach long-term success.
Vulnerable: Individuals exhibit poor financial behaviors, are struggling and require immediate assistance and behavioral change to adjust course for long-term success.
In the Financial Health Network’s annual Trends Report, as of August 2020, more than two-thirds of people in America (approximately 167 million people) were Financially Coping or Financially Vulnerable. These individuals are struggling to spend, save, borrow, or plan in ways that allow them to be resilient and seize opportunities over time.
Please note: I would expand upon the above categories to acknowledge that although “positive” behaviors are a huge component of one’s financial health, there are racist and sexist policies in place that may prevent someone from being financially healthy even if they are doing everything right.
There are many indicators to measure financial health. These include the obvious such as the amount of savings you have, how much credit card debt you have, and what percentage of your income you are spending on monthly expenses.
Some of the non-obvious indicators of financial health to consider include feeling financial fulfillment, feeling financial stress that leads to anxiety, feeling behind in one’s financial life, and the mental health impacts of being financially vulnerable or financially coping.
The progressive definition of financial well-being put forth by the Consumer Protection Bureau seeks to encompass these non-obvious indicators. Let’s revisit the definition of financial well-being.
“Financial well-being is a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future and is able to make choices that allow them to enjoy life.”
Financial wellness benefits that provide real-world solutions to financial challenges address part one and two of the financial well-being definition. The ability to meet current and ongoing financial obligations, and to feel financially secure in one’s future, is miles ahead of where many employees currently stand. Again, more than two-thirds of people in America (approximately 167 million people) were found to be struggling to spend, save, borrow, or plan in ways that allow them to be resilient and seize opportunities over time.
Practical spot solutions such as 401k matching, earned wage access, student loan payment assistance will go far in helping individuals move from financially vulnerable to financial coping. The next step will be to move folks from financially coping to financially healthy, which is where a comprehensive financial wellness benefits package comes into play.
My money philosophy
In my research and in working with thousands of employees and entrepreneurs on their relationship with money, I have determined that financial wellness is one of the three pillars of being able to thrive financially. The other two pillars include money mindset and money aura. You can think of these three pillars as you would think of the three pillars associated with physical health.
The three pillars of your physical health are:
Pillar one: physical activity
Pillar two: nutrition
Pillar three: self-image
The same goes for thriving financially. The three pillars of your financial health are:
Pillar one: your financial wellness, which I discuss in-depth in the book
Pillar two: money mindset
Pillar three: money aura
Financial wellness is to money as physical activity is to the body. These are the action steps you can take to elevate your financial health and create financial security. Just like you take action steps to elevate your physical health.
Money mindset is akin to nutrition. Just like you need to feed your body with wholesome foods, I suggest feeding your mind with wealthy thoughts. In the mainstream financial media, the messages around money are muddied with anxiety, fear, and scarcity-oriented thinking. These poor messages need to be balanced with messages of abundance that will nourish and expand your mind.
Money aura is akin to the self-image you have of your body. An individual can know which workouts to do and what foods are best for their body, but if they have a poor self-image they will sabotage their efforts. The same applies to money. A poor money aura is the result of unhealed financial trauma. In the United States, the history of white economic terrorism has negatively impacted the money aura of both the abused and of the abuser. Everyone has suffered as a result of the racist and sexist policies that have allowed white people to build economic power on the backs of human beings.
In the book, I focus on the financial wellness benefits organizations can offer to their employees to elevate their sense of security and stability. Money mindset and money aura are entirely different books on their own. If you are interested in diving into my philosophy around money mindset, I encourage you to click here to join the paid membership portion of Money & Mimosas.
