Every year since 2012, the United Nations Sustainable Development Solutions Network in partnership with the Ernesto Illy Foundation have produced The World Happiness Report. And every year, the Nordic countries - Finland, Norway, Denmark, Iceland and Sweden – have ranked in the Top 10. So, what’s the secret? Why are these nations so happy?
One thing all these countries share in common is their commitment to providing greater financial security and financial freedom to their people (despite higher taxes) through healthcare, education and pension programmes. Numerous studies show that greater financial security and financial freedom positively affect not only for our financial wellbeing but, our happiness overall.
So, while money can’t buy happiness, it can provide security and comfort, which contribute to our happiness.
There’s a F.I.R.E. That’s Spreading
As reported by CBS, a new trend known as "Financial Independence, Retire Early," or F.I.R.E., is resonating deeply with today’s youngest generations. The F.I.R.E. movement encourages people to live a thrifty life and save a large portion of their income in order to take control of their financial independence in the future.
Many Millennials and Gen Zers have taken to this idea with the goal to become financially independent as soon as they possibly can.
The Cost of Financial Worry
Although F.I.R.E. is a hot topic (pun intended) among today’s youngest workers, not every young person knows how to budget, nor how to save or how to plan for their retirement.
Employers have an important role when it comes to the financial wellbeing of their employees. After all, financial worry affects our work, our wellbeing, productivity and engagement, not to mention the economic impact it can have on companies as a result of sick leave or absenteeism.
A 2017 Workplace Benefits Report by Bank of America revealed that 56% of employees said they are very or somewhat stressed about their financial situation. 53% of those employees report that the stress interferes with their ability to focus and be productive at work with Millennials twice as likely as baby boomers to say stress interferes with work. Unfortunately, the financial effects of COVID-19 have only exasperated things.
According to a new study, Millennials are particularly vulnerable to the economic upheavals of the COVID-19 crisis. Lower earnings mean less disposable income, which means less savings if they lose their job or are forced to reduce their working hours. The same study shares that 67% of Millennials have lost income due to the crisis and 53% say that the pandemic has negatively impacted their financial wellbeing.
Forming Positive Financial Habits
To support the financial wellbeing of employees, companies need to help their employees build positive habits around their finances. And this can only be done through education.
Research shows that financial counselling services and tools aimed at budgeting, saving, and investing is, indeed, something employees want. In fact, in the early-mentioned report, 86% of employees surveyed said would participate in a financial education program provided by their employer.
As we go through different milestones in life - buying our first home, starting a family, supporting our children through school, and eventually preparing for our retirement - our financial priorities naturally change. However, if we develop positive habits around money, we are better equipped to navigate through these life stages.
Educating and Empowering Employees
Here are some suggestions on how you can help your employees understand their finances:
- Invite an expert into the workplace to give a talk or a series of talks on a variety of financial matters including debt management, budgeting and savings.
- Provide financial advice on how employees can best use their salary during different milestones.
- Provide a selection of employee benefits which provide financial security and financial wellbeing.
- Even if your youngest employees are decades away from retirement, explain the importance of the pension, how it works, and how to get the most out of it.
- Help employees become aware of their total compensation beyond just their salary, such as flexible benefits or flexible budget plan. This way, employees can see the true value of their compensation and can utilise the different components accordingly.
For companies, it’s a no brainer - investing in the financial wellbeing of your employees is money well spent.
For more tips and to learn more about financial wellbeing by downloading our free e-book Financial Wellness: The Topic You Can’t Afford to Ignore.