FINANCIAL WELLNESS PROGRAM

Objectives

This programme designed for trainers of wellness champions. It will enable them to:

Gain an indepth understanding of the concept of financial wellness

Understand the importance of implementing financial wellness programs at the workplace

Articulate the benefits of a financial wellness program to employers and employees

Understand the components of a financial wellness program Understand how to measure impact of a financial wellness

program Understand how to start a financial wellness programs at the

workplace Gain a basic understanding of the concepts of Financial

Education

What is financial wellness? Financial wellness results from making

informed short- and long-term financial decisions that result in optimal health, productivity, and a solid foundation for every stage in life.

A state where financial stress is gone, replaced by actions that support well thought out goals.

In a nutshell, you mindfully manage your money, instead of your money managing you.

Why Financial wellness?

Financial issues affect more employees than physical illnesses combined.

More than half the workforce lives paycheck to paycheck

Many people save little, if any, money at all

Living paycheck to paycheck and failing to save money results in a high percentage of stress among employees

Anxiety over stress can negatively affect your health and productivity

Impact on employers

Although finances are a personal issue they can have a direct impact in the workplace.

A successful organization depends on successful individuals.

Organizations that provide financial wellness programs to their employees witness positive effects on their bottom line

Impact on employers

Financially distressed employees have trouble functioning in their jobs, consequently hurting their physical health as well as taking a bite out of the employer’s bottom line.

Individuals with stress caused by large outstanding debts and unstable financial situations report incidences of ulcers and digestive problems, migraine and other headaches, anxiety, depression and heart attacks

Stress translates into higher health care costs and other negative effects on the workplace

Financially stressed employees experience higher absenteeism and turnover, lower levels of job satisfaction, lower satisfaction with compensation and lower productivity.

Presenteeism – the time employees spend at work not working – also is a big factor. 80% of employees report spending between 12–20 hours of work time per month dealing with personal financial issues.

Financial wellness can potentially... Decrease turnover Increase productivity Enhance company culture Better employee-employer relations, higher

morale, increased retention rates, lower fringe benefit costs, lower transaction costs, and increased output

Above all, financial wellness can pay long-term dividends to your company health and your employees’ quality of life.

Higher morale = increased productivity = higher profits

The situation

The current global economic crisis has left many people feeling vulnerable.

These volatile times have also exposed a frightening reality; many people are completely unprepared to deal with personal financial crisis

The reality

The current global economic situation is NOT the sole cause of many employees’ financial difficulties.

The true problem is a widespread lack of basic understanding of financial principles and the poor choices that result.

Benefits to employees

As employees move into a position of effectively directing and managing the income they earn, they enjoy the benefits of: Less financial stress Reduction of debt Paychecks that go further Savings and investment increases Financial goal realization Greater financial security and strength

Components of a financial wellness program

The goal of a financial wellness plan is a shift in behavior . It involves; Creating awareness of the current

financial situation Providing education for establishing

financial goals and Promoting behavior change inorder to

achieve personal financial goals through informed choices in the financial planning process.

Awareness

Distribute financial education materials and articles from reputable vendors via newsletters, SMS, handouts, and posters include posting information on bulletin boards, intranet, in break rooms, holding seminars, along with a lunch and learn format, making announcements at staff meetings.

Keep employees informed of all changes and options in their benefits plans

Use success stories from co-workers to inspire and motivate the workforce

Education

Provide employees with understandable worksheets that help them prepare personal budgets, determine net worth, estimate retirement needs, etc.

Conduct lunch and learns or seminars around topics of interest to both the company and the employees

Hold periodical financial fairs to give employees open access to a variety of available financial services and products

Behaviour Change

Utilize existing Employee Assistance Programs (EAP) to encourage people to seek counseling and assistance

Periodically host a series of comprehensive classes with experienced financial and benefits advisors

Allow employees access to free or subsidized personal sessions with advisors or use these sessions as incentives to participate in other programs, such as company wellness initiatives

The behaviour change modelThe stages of behavior change developed by Prochaska include: Pre-contemplation – “I can’t” or “I won’t:” About 40 percent of all

people are here when it comes to behavior change. They are unaware their behavior is harmful or risky to their health or may not be ready to admit it.

Contemplation – “I may:” Individuals in this state are more likely to acknowledge they have a problem and start moving toward a solution. Plans are indefinite, but they are forming.

Preparation – “I will:” Most people in this stage intend to make a behavior change within 30 days.

Action – “I am:” In this stage, people are taking overt action to change.

Maintenance – “I still am:” Change doesn’t end with the action stage; change is an ongoing process with relapses and new successes.

Measuring the impact of a financial wellness program Measurement of any wellness program is absolutely

critical to its success. Tracking and reporting results is the key to

maintaining support from senior leadership, discovering weaknesses in programming, and planning for the future.

Every good program starts with baseline data. Starting points for gathering this data include: Utilization of health benefits Staff turnover Absenteeism and productivity.

To keep momentum going in the short-term, evaluate financial wellness offerings by tracking participation and satisfaction levels, and assessing outcomes on behalf of the employee population.

Starting a financial wellness program Starting a quality financial wellness plan is no

different than executing any results-oriented employee wellness program.

Examine company needs AND employee interests. Marry the needs of these two stakeholders. (look at company data)

Embed financial wellness concepts into other established programs (think wellness!) and trainings. This is an easy way to increase the engagement and credibility of all company programs

Develop a strong communication plan Determine well in advance how the program will be

evaluated You’ve got a strong recipe for success!

What is Financial Education?

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Knowledge

Skills

Attitudes

For anyone who makes decisions about:

Earning SpendingInvestingSaving Borrowing

Good money management behaviors

Why Financial Education?

Enables people to manage personal finances . Allows people make more informed financial

decision-makers through better planning. Its strengthens behaviours that lead to increased

saving, more prudent spending and borrowing for sound reasons.

Facilitates life-long rewards i.e +ve change in financial behaviour leading to improved well being (Transformation)

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Concepts of financial education

Budgeting Savings Banking services Debt management

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What is a budget?21

A Budget is a summary of estimated income and how it will be spent over a period of time.

MY BUDGETMONEY IN (income) Amount

Salary

Business

Others

TOTAL

MONEY OUT (expenses)

Transport

Rent

Food

TOTAL

SAVINGS

+ Surplus / - Deficit = (Money In – Money Out)

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LIVING WITHIN MY MEANS23

Matching needs to income Need: A basic necessity you cannot

do without. These things are necessary for our survival.

Want: Something optional, or not needed for everyday survival. These are things that we want, and when we buy them, we are happy.

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PLAN TO SAVE

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CONCEPT OF SAVINGS

What is a goal you have for the future?

Why do you want to achieve this goal? 

How do you plan to pay for this goal?

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CONCEPT OF SAVINGS

Putting money aside is the key to being wise about money.

“Putting money aside” is saving.

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Long-term vs. short-term goals 28

MY SHORT TERM GOAL-6MONTHS

MY LONG TERM GOAL -5 YEARS

Savings plan 29

Savings Goal Total Cost

of item

Duration

Amount to save each week

Short-term

Long-term

Tip: To decide the amount to save every week, divide the total amount of money you need by the number of days, weeks or months between now and when you want to reach your savings goal.Amount to save ÷ Number of (days/weeks/months) = Amount to save

each (day/week/month) to meet a savings goal

Increase your savings 30

Savings small amounts

AMOUNT DURATION TOTAL

20 365 7,300

50 365 18,250

100 365 36,500

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CAN I TAKE ON A LOAN?

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What is a loan?

Money that a borrower can use temporarily. After a defined period of time, the money is repaid to the owner, usually with interest or a fee charged for the money.

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Why do we borrow money?

To invest To respond to an unexpected emergency To consume To pay debts

Are these good reasons why we borrow?

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What are some differences between using our own money and using borrowed money?

A loan costs money A loan comes with obligations for the borrower,

including repayment with interest and sometimes group membership

You are more free when you use your own money By borrowing, you can get a larger lump sum

than you might if you use your own money Borrowing allows you to get money more quickly

than if you rely on your own ability to save little by little

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Questions to ask before Borrowing Money

What is the schedule for repayment? (i.e. weekly, monthly)

How much will I need to repay each time? What will be the total amount of the

repayment including interest? When will I receive the money? Is this too

early? Late? What sources of income or savings will I

use to repay the loan?

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Questions to ask before Borrowing Money

If you are borrowing to buy a tool or piece of equipment: Will the object outlive the loan and continue to earn money for me?

Can I charge a price for the goods I buy with the loan that is high enough to repay the loan and have money left over?

Do I need to guarantee the loan with collateral? If so, what?

What are the consequences if I fail to repay?

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How much debt can I afford?

Often people take on too much debt and have trouble making repayments.

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The “Rules of Thumb” for Taking a Loan Don’t let debt prevent you from paying for basic

expenses such as food, school fees, and other necessary items

Keep track of the amount and frequency of your loan payments

The total of your loan payments should not exceed 20% of your usual income

Try to limit borrowing for personal consumption Have a plan for making loan payments if it will

take time for the loan to generate more income for you

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IN CONCLUSION

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THE END