Guide to Employee Financial Wellness

Step 1: Understand Your Employees’ Financial Lives




More than half of employees say that personal finances are their biggest source of stress.

Source: PwC’s 8th annual Employee Financial Wellness Survey

Employees at your company do different jobs, have different personal circumstances, and have different financial lives. The first step in exploring financial wellness programs is to understand what your employees’ financial realities look like and how they vary from job to job. You may think their financial lives are none of your business, but financial challenges can show up in the workplace. Using this guide will set you up for success – and the first step is having a good understanding of the issues your employees face.

One Size Does NOT Fit All

Margaret is the CEO of Eton Tech, a technology services firm that employs just over 500 people. At a Chamber luncheon, Margaret talked at length about the employee financial education program they had recently introduced. The management team and associates both loved it and felt they were seeing great results. Julio was sitting at Margaret’s table. He’s the CEO of a customer service company with about 700 employees. Julio’s company offers good wages and benefits, but Julio is always looking for ways to do more for his employees. When he got back to the office he told his head of HR to implement the same program.

Four months later, Julio’s company surveyed its employees about the financial education program. The results were bad. As it turns out, financial education wasn’t what employees needed. The employees at Eton Tech are mostly IT professionals working in a traditional office setting. Most of Julio’s employees are lower income call center workers. They didn’t need to learn about saving, planning for retirement, or refinancing a home loan. They are under much more financial stress and need immediate help, such as emergency loans or connections to free legal services to help with unpaid parking tickets. They didn’t need financial education marketed for people who are already doing OK.

With employee financial wellness programs, one size does not fit all. To find the right solution, companies first need to identify the problem. The best financial wellness programs are designed to fit that particular workforce. Understanding the financial realities of your employees’ lives will set you on the right path.

Employment is at the center of most people’s financial lives — it is where they generate their income, health insurance, and retirement benefits. Because of that, you already know a lot about your employees’ financial lives.


How much are employees in different jobs at your organization paid? Whether you are a large company with a sophisticated human resource information system or a small business using Excel, you are storing valuable information about your employees’ financial lives—starting with what they earn.

Once you have this information, the MIT Living Wage Calculator can help you see how your employees’ wages compare to the cost of living in your community. Check to see if there’s a United Way ALICE report for your community. ALICE stands for “Asset-Limited, Income-Constrained, Employed.” Data from an ALICE report can provide perspective on financially fragile families in your community.



When PayPal conducted a survey of employees to better understand their financial lives, executives discovered that even though jobs paid at the market rate, 60% of their call center and hourly workers had trouble meeting their basic needs. Using a living wage tool can help illuminate how far your workers’ wages really go.

Source: LinkedIn

Retirement Plan Activity

If you offer a retirement plan, like a 401(k) or 403(b) plan, your plan administrator has information that can help you understand more about your employees’ financial lives. To take hardship withdrawals, employees must prove they have experienced a significant financial problem, so the prevalence of these withdrawals can be a strong signal. Although employees do not have to prove financial need to take retirement plan loans, borrowing from long-term savings can be an indication of financial hardship. Understanding how employees use loans can also give you a sense of employees’ financial realities.

Financial Insecurity Indicators:

  • Requests for pay advances
  • Early retirement plan withdrawals
  • Loans from retirement savings
  • Low enrollment in retirement plans
  • Transportation trouble, which might show up as absenteeism
  • Low use of direct deposit

Other Payroll Savings

Some employers offer other kinds of savings options via payroll deduction, such as split direct deposit. If you offer an option like this, examining how frequently employees take advantage of payroll savings opportunities can be another useful indicator of how your employees are doing financially.

Your Benefits Package

Benefits are an important part of total compensation and can have a big impact on employees’ financial lives. Conducting a benefits package audit can help you understand where your employee benefits are supporting employees and whether there may be opportunities to improve employees’ financial stability.

Here are some questions to ask:

  • What proportion of your frontline employees are eligible for benefits like health insurance, dependent care benefits, and retirement plans?
  • How many of your employees are enrolled in benefits? Is the proportion different by wage band? If so, benefits might be too expensive for some of your lower wage workers.
  • Adding together health insurance premiums and deductibles, how much does health insurance cost employees per year? How does this compare to what you learned about their wages? In other words, what percentage of their income do frontline employees spend on health insurance coverage?
  • What proportion of your eligible frontline employees participate in a retirement plan?

What you’ll have in the end:

  • A big-picture view of employee wages and how they compare to the cost of living
  • How employees are using the benefits you already offer
  • Ideas for how to make benefits more beneficial