By Jeanne Stapleton, Financial Advisor, The Co-operator
What is financial wellness?
“A state of financial well-being where a person maintains
A manageable level of financial stress
A lifestyle at or below their financial means
A strong financial foundation including adequate emergency savings, no high-interest debt, and a sufficient insurance and estate plan to protect assets, income, and loved ones
An ongoing plan to achieve future financial goals.”(1)
State of financial health of Canadians
A 2014 national survey “found that 42 per cent of Canadians rank ‘money’ as their greatest stress. That is more than double the stress they feel from relationships or health and almost double that from work. This stress is driving Canadians to lose sleep, reconsider past financial decisions, argue with partners and lie to family and friends.”(2)
How did we get to this state?
Forty-one percent of employees spend more than their net pay.(3) Before you say “I never do that,” add up in your head how much you have spent in the last two days and write down your total. Now go check how much you really spent on both your bank and credit cards. Was your estimate close? Like most of us, you have probably underestimated how much you spent. No wonder we are short when the automatic payments for insurance and the car come out!
Impact of poor financial wellness on your bottom line
Employee productivity is significantly impacted by financial stress. Financially stressed employees are five times more likely to be distracted at work by their finances, and they spend three hours or more each week dealing with financial matters at work. They are also more likely to miss work, cite health issues caused by financial stress, have problems at home, and be unable to retire at 65.(4)
Employees whose financial health is poor are less engaged and often feel that their employer does not care about their financial well-being. They often believe that their pay is not keeping up with the cost of living and that their group benefits plan is not competitive. If your employees feel this way, they may not recommend your business to others as a great place to work.(5)
Money mindset and behaviour
We manage our money emotionally, and what we learn about money often comes from our parents. What common statements did you hear? “We can’t afford it”; “work hard and get good grades, and money won’t be an issue”; “money doesn’t grow on trees”? Or maybe you never heard the word “no.” All of these ideas affect your management of money.
Money management is not about math. It is about changing your mindset and how you interact with others about money. We deal with money daily, and our money behaviour is influenced by those around us. No one wants to be described as “bad with their money,” which is why people conceal their financial situations. We all have money challenges. In a similar vein as the Bell Let’s Talk initiative for mental health, we need to promote a culture of openness about our money challenges. This will allow us and our employees the freedom to solve our money problems and reduce our stress levels.
Benefits of creating a financial wellness culture
Setting up a financial wellness program has many advantages for your business and your employees. There are direct links between participation in a financial wellness program and lower health care/benefits costs, increases to retirement plan contributions, increased use of benefits available, and greater job satisfaction.
As a result of participating in a financial wellness program, employees have reported that they have brought their spending under control, prepared for retirement, paid off debt, saved more for major goals, and better managed their investments/asset allocation.(6)
The key to having a successful wellness program and improving your bottom line is having an open, honest, and safe environment in which to talk about money challenges.
Financial Advisor, The Co-operators
Jeanne’s current mission in life is to bring financial wellness to every Newfoundland family. A personal finance professional for over seven years, she focuses on increasing her clients’ bottom line through better cash-flow management, investments, and efficient insurance programs. A native of Labrador City and a graduate of Carleton University (political science and law) and of Dalhousie University (MBA), Jeanne continues to add value to her clients by working toward her Certified Financial Planner® accreditation. When she is not helping her clients build a better financial future, she can be found playing with her two daughters or fulfilling her role as President of the NLOWE Board of Directors.
(1) Financial Finesse, “Workplace Financial Wellness Programs: Best Practices,” https://ffinesse.app.box.com/v/FinWellnessGuide.
(2) Financial Planning Standards Council, “Canadians Cite Money Worries as Greatest Source of Stress,” http://www.fpsc.ca/news/publications-research/how-is-financial-stress-affecting-canadians.
(3) through (6) “Special Report—Financial stress and the bottom line: Why employee financial wellness matters to your organization,” https://www.pwc.com/us/en/private-company-services/publications/assets/pwc-financial-stress-and-bottom-line.pdf.