Financial wellness during the COVID-19 pandemic. How COVID-19 is impacting financial stress, and how financial wellness programs can help.
The vast majority of U.S. employees – 84% – expect the COVID-19 pandemic to impact their long-term financial wellness, according to a new study from Northwestern Mutual. The annual Planning and Progress study also found that while the pandemic is financially distressing, it actually inspires resiliency and some positive behavioral change.
Higher levels of employee financial stress are linked with lower productivity and poor financial decisions, creating a negative feedback loop. This new study showed that some employees are taking a different approach. “People appear to be cautiously optimistic about the future and a growing number are taking responsibility and action, which are key ingredients for financial planning,” said Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual.
Financial Stress Statistics During COVID-19
The most substantial result of the study is an increase in financial stress. A hefty 38 percent of participants took undesirable steps to make ends meet in the short-run. Some of those steps included:
- 26 percent of participants took advantage of payment deferral options
- 19 percent of participants pulled from their personal savings or emergency funds
- 13 percent of participants borrowed from a family member or friend
As a result of the tangible damages of the COVID-19 pandemic, workers expressed a declining sense of financial wellness. Nearly 60 percent of employees believe the financial impact of COVID-19 will be moderate or high. Just 35 percent of participants rated themselves as financially secure. That is a drop of 10 percentage points from the pre-pandemic statistic. On the other side of the spectrum, 19 percent of participants rated themselves as not financially secure, a seven percentage point jump from the 12 percent statistic prior to COVID-19.
Increased Demand for Financial Wellness Due to COVID-19
For many employees, COVID-19 has illuminated areas of financial stress that they would like to alleviate. More so than before the pandemic, workers are trying to meet the challenges of this economic downturn and striving for financial wellness. Fifteen percent of participants said they did not have a financial plan before the pandemic, but now created plans and 20 percent of participants said they made significant adjustments to the plans they had before the pandemic.
The pandemic also inspired a significant uptick in the number of Americans looking for financial guidance: 19 percent of Gen X, 22 percent of Millenials and 22 percent of Gen Z said they did not previously have financial advisors but are now in the market for them. As these younger generations continue to enter the workforce, their demand for financial health benefits continues to increase. It is an opportune time for employers to supply financial wellness programs.
While 84 percent of Americans COVID-19 to have a negative impact on their financial wellness, a similarly large 83 percent of Americans believe they’ll achieve long term financial security.
How Financial Wellness Programs Can Help
Now more than ever, the importance and desire for financial wellness is evident. Platforms like Best Money Moves have the support system employees are seeking.
Best Money Moves is more than a calculator and a budgeting tool. It is a user experience. We leverage user analytics to create individualized employee content and gamify the platform to encourage consistent engagement. When employees need a helping hand, our team of money coaches is always at the ready. And, of course, employee information is always private.
If you want to learn more about how Best Money Moves can bring financial wellness to your company download our whitepapers and sign up for a demonstration here.