Design your financial wellness program to do more than “educate” employees about finance. Design it to effect behavioral change.

Over the past few years, we at Sum180 have been happy to see more and more employers come to recognize the value of financial wellness programs in terms of employee wellbeing and productivity. With the importance of financial wellness in the workplace now generally acknowledged, the question employers and financial wellness providers must address together has become: How do we define and design a successful program?

First, let’s consider the following:

  • 56% of employers indicate they are very likely to create or focus on the financial wellbeing of employees in ways that expand beyond retirement decisions
  • 89% of employers indicate they are very or moderately likely to add tools, services or communications to expand their financial well-being focus
  • 55% of employers already offer help in at least one category that falls under the umbrella of financial well-being and 38% have at least three categories covered. By the end of the year, these percentages are expected to grow to 77% and 52%, respectively

Yet in spite of these efforts by employers:

  • Only 6% of employees “strongly agree” that their company does things to help them manage their finances more effectively

This disparity between what employers are doing and employees’ perception of the benefits provided, we feel, is deeply revealing. Clearly, not all financial wellness programs are created equal. Yes, financial wellness has tremendous potential to drive employee engagement and retention – but first, employers need to get it right.

So, what is going on in the field of financial wellness? Our examination of available financial wellness programs showed that most programs are built on the assumption that if we just teach our employees “financial literacy,” their personal financial situations will improve. This ignores the fact that money is deeply emotional – and that any effort to change the way we deal with our money must address this.

At Sum180, of course, we been working to understand the emotional infrastructure of financial decision-making from the very beginning. One of the most important things we’ve learned is that when it comes to complex, emotionally-driven issues such as money, there is often a disconnect between: 1) knowing what to do; 2) understanding how to do it; and 3) actually doing it. In this sense, financial wellness is similar to physical wellness. I may know I need to lose 20 pounds; I may even understand, in theory, how to lose weight – but still have trouble acting on what I know.

This is why financial wellness programs that focus solely on education tend not to effect behavioral change: because education alone is not the answer. To design financial wellness programs that make a meaningful difference in employees’ lives, we must also draw on established principles of behavior change theory.

1. Social cognitive theory: Social interaction improves our ability and inclination to make change. This principle works in many workplace fitness programs – for instance, the motivational effect of sharing Fitbit results among coworkers. A closer look at the popular fitness app LoseIt also demonstrates how powerfully motivating social interaction can be: 1. LoseIt connects us with friends who share similar goals and hold one another accountable; 2. It sends regular notifications on a shared platform to prompt us to act; 3. It helps us to track progress towards our goals with clear visual feedback that we can then celebrate with others. This principle is also powerfully motivating when applied to finances. By prompting engagement with and learning from peers, a financial wellness program enables employees to understand that they are not alone in their challenges with money; it demonstrates tangibly that financial wellness principles do work for real people like themselves. Best of all, a social platform allows employees to share stories and encouragement in a safe environment as they move towards their financial goals.

2. Positive psychology: We are most able to change, grow, and thrive when we feel at peace about our past, happy in the present, and hopeful about the future. Employees who may be overwhelmed by fear or hopelessness about their finances do not need scolding, judgmental messaging from us. What they do need is a financial wellness program that encourages them to hope, and that celebrates the positive:

  • that they have already made some important accomplishments;
  • that no matter where they stand now, they can take steps forward;
  • and that it is never too late to build financial security.

In this context, extrinsic rewards such as points, badges or levels, can help employees get started on the right path – of building an emergency fund in a specific amount, for example. But intrinsic rewards such as confidence, a sense of accomplishment, and peace of mind far outweigh the extrinsic – and should be emphasized.

3. Stages of change: Small, personalized steps enable us to move from the earlier stages of change, towards action. Traditional financial plans are overwhelming in scope and packed with confusing financial jargon. They do nothing to help employees get past feelings of being hopeless or stuck. To prompt behavioral change, financial advice needs be personalized. An employee should be able to recognize that “This feels right for me – I can do this.” And, financial advice also needs to be right-sized. By giving employees only their few most important next steps at a time, in manageable bites that can be accomplished in a period of months, we empower them to focus, and act.

4.Gamification: Framing a situation as game or play leverages our natural desires for fun, mastery, and achievement, to effect behavioral change. Users of the popular language learning app Duolingo, for example, receive lessons in an engaging multimedia format, then have those lesson reinforced immediately via easy interactive exercises. For these users, learning a new language becomes genuinely fun – plus, they feel relaxed and respected throughout. As a result, their confidence grows. They are motivated to keep going – and to learn more.

Learning to deal with money can be similarly gamified. It takes a lot of hard work up front to present complex financial principles in fun, friendly, accessible scenarios or modules that are easy for employees to digest. But the result is worth it: “finances” are transformed from difficult and stressful to easy and even fun – something employees feel confident about and want to tackle.

In short, financial wellness providers do not have to recreate behavior change theory. We just have to apply it really well to finance. The change we want will not come easily or quickly – and we should not expect our success rates to be any higher than those in any other industry. But these proven behavior change techniques can help unlock the habits, behaviors, and emotional barriers to individual financial health, and should be part of any financial wellness program.

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