Phone with finacial note

Are your employees grappling with financial stress, impacting their productivity and well-being?

As a senior business leader or HR executive, you have the power to initiate change among your workforce with the right set of tools and resources. While employee financial wellness programs are sometimes overlooked in an organization, the value of real-time budgeting and financial wellness coaching solutions is exponential with the potential to uplift and empower your employees.

Financial Stress: A Barrier to Performance

Research by the American Institute of Stress reveals that money is the primary source of anxiety for 65% of Americans. This stress not only affects individuals and their families but also resonates within the workplace, diminishing productivity and engagement.

A recent Harvard Business Review article on employee financial stress included even more startling data. Citing Financial Finesse’s findings, HBR noted that 80% of U.S. employees surveyed between 2021 and 2022 experience some level of financial stress, with 27% facing high or overwhelming stress. More research documented in a 2023 report by the TIAA Institute and the Global Financial Literacy Excellence Center revealed that employees spend an average of eight hours a week dealing with financial matters, with half of that time occurring during work hours.

Addressing these concerns is paramount to fostering a thriving work environment.

Employee financial stress is at the greatest level it’s been since the Great Recession… Employer-sponsored financial wellness programs are no longer simply nice to have. They’ve become an “imperative.”

– Financial Finesse founder and CEO Liz Davidson in HBR’s “It’s Time to Prioritize Employees’ Financial Health”

Good Financial Intentions Aren’t Cutting It

Most of us have all taken a run at budgeting. Typically, we have an accounting or “book-keeping” view of our finances, attempting to track our income and expenses using a manual ledger, an Excel spreadsheet, or financial tracking app. This perspective is often characterized by the once-a-month (or once-in-a-blue-moon) reconciliation of spending versus income. This exercise is filled with good intentions: “Well, I tried, maybe next month…” or “I’m going to do better.” It often results in remorse and/or resignation.

person budgeting

Good intentions rarely change anything, promises are easily broken and each time we dig ourselves deeper and deeper into a money pit. We are trapped by both our brains and our own unexamined money habits, preventing us from making progress toward our financial goals!

We need to rewire our “Money Brain.”

Real-time Budgeting: The Catalyst for Change

Traditional budgeting methods often fall short with sporadic reconciliations and unmet promises. Real-time budgeting, on the other hand, offers a paradigm shift by providing immediate feedback and fostering a proactive approach to financial management. By assigning every dollar a purpose and embracing frequent monthly balancing, employees can rewire their “Money Brain” for success.

The use of money and what it does for us triggers pure physiological reactions in our brain. According to health and wellbeing websites: when we spend money, various involuntary physiological reactions occur in the brain. These reactions involve several regions and neurotransmitter systems that influence our emotions, motivation, and decision-making.

-Martha Harris Byron, “Brain Chemistry and Our Financial Behaviour”

Empowering Your Employee Financial Wellness with Real-time Budgeting

Implementing real-time budgeting involves three crucial processes:

  1. Monthly Budgeting: Achieve balance between income and expenditure, aligning financial goals with actionable plans.
  2. Spending Discipline: Empower employees to make informed spending decisions in real-time, fostering financial mindfulness and moderation.
  3. Feedback Mechanism: Encourage continuous improvement by acknowledging both positive and negative financial behaviors, fostering brain muscle memory and a culture of accountability and growth.

This simple but profound shift toward a Real-time Budget- once established – will accelerate a person’s progress, and help meet and potentially exceed their financial goals.

What does Real-Time Budgeting look like in action?

Susan was a Senior Sales Leader in a technology company. She had a child leaving for college and debts that had accrued after her husband was laid off from his teaching position. She was anxiously trying to make ends meet. She was distracted at work and worried that her performance was being affected.

When she decided that it was time to take control of her finances, Susan sat down at her kitchen table with a cup of tea, armed with her monthly budget spreadsheet. In one column, she meticulously listed her income sources, and then in another, she detailed her expenses: utilities, groceries, dining out, auto, tuition, and more.

Susan knew that to truly master her finances, she needed to become intimately familiar with her budget. Before she embarked on any spending, she made it a habit to consult her budget first. If she was heading to the supermarket, she’d check her grocery budget. Before she went into a restaurant, she’d review her dining out budget allocation.

Her brain became finely tuned to the predetermined limits she had set for each category. And whenever she managed to spend under her budgeted amount, a little surge of satisfaction washed over her. Her brain was rewarding her for her financial prudence, rewiring her “money brain.”

Not every month went perfectly according to plan. Sometimes, she overshot her budget. Perhaps her electricity bill was higher than expected, signaling a need to reallocate funds from another category that month. This wasn’t a pleasant experience: it felt like a reprimand from her own financial conscience.

Yet, if she managed to spend less than budgeted, say by eating out less frequently, she could reallocate those saved funds to something she was saving up for—a vacation, perhaps. These moments were like a pat on the back from her brain, reinforcing positive financial behavior.

About this time her company implemented a financial wellness benefit: employees could meet with a financial wellness coach for up to six sessions annually to help them identify, maintain, and stay accountable for their financial goals! Susan discovered through her coaching that managing her finances wasn’t just about numbers, but rather also about emotions. The joy of staying within budget and the discomfort of overspending both played crucial roles in shaping her financial habits.

Through coaching, she realized that by keeping her income and spending balanced, regularly reviewing her budget, and purposefully adjusting her allocations, Susan was gradually retraining her brain to “feel” her money. And with the support of her coach, she was able to stay accountable for her behavior and discover additional tools for ensuring financial health and wellbeing.

Insights from Financial Wellness Research: The Impact

Ramsey Solutions conducted a study of more than 3,000 full-time American employees working at organizations with 25 to 3,000 employees who receive benefits through their employer. The study covered topics including employee benefits, perceptions of and engagement with financial wellness benefits, employee financial and mental health, and other trends impacting today’s workforce.
The sample was fielded from January 10, 2022 to January 25, 2022, using a third-party research panel. The results underscored the profound impact of financial stress on employee well-being and productivity.

There are many books or courses available to guide employees in improving their personal finances. While these traditional, static resources offer guidance, the involvement of a professional Financial Wellness Coach, as we have seen in the example of Tech Leader Susan above, elevates the experience, providing personalized support and accountability.

Investing in a financial wellness program anchored by real-time budgeting can yield tangible benefits. By partnering with Churchill’s Financial Wellness Coaches, you empower employees to navigate financial challenges effectively, fostering resilience and enhancing overall performance and wellbeing.

Take the First Step towards Improved Employee Financial Wellness

Are you striving to cultivate a financially empowered workforce? By championing financial wellness coaching, you can pave the way for enhanced productivity, reduced stress, and a brighter future for your organization.

Churchill Leadership Group can support you in strategizing how financial wellness can enhance your talent and retention strategy, partner with you to develop a program and provide world class certified financial coaches for your leaders and teams. Contact us today

AUTHOR BIO

Chris Smith is a Churchill Personal Financial Coach with over 40 years’ work/life experience, including successful corporate leadership, training and coaching. He holds a bachelor’s degree in chemical engineering.

In his role as a personal financial coach, Chris has consistently delivered valuable services to clients. One key aspect of his work involves behavioral coaching, where he addresses the behavioral and psychological aspects of personal finance to help clients achieve their financial goals and overcome challenges. Additionally, he provides hands-on financial education, emphasizing not just the “What’s” but also the “Why’s” behind essential financial concepts and tools.

Chris conducts thorough financial assessments to identify strengths and weaknesses in clients’ financial situations, enabling the development of clear and achievable financial goals tailored to their unique circumstances. He assists clients in creating and maintaining realistic, visible, and real-time budgets to manage expenses effectively, ensuring they truly feel in control of their finances.

Sources Cited:
https://www.stress.org/stress-level-of-americans-is-rising-rapidly-in-2022-new-study-finds
https://www.ramseysolutions.com/corporate-wellness/financial-wellness/resources/2022-study
https://cleverism.com/science-of-finance-money-management/
https://www.shrm.org/topics-tools/news/benefits-compensation/employee-financial-wellness-drops-to-new-low-bank-of-america-report

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