Why financial wellness programs desperately need a makeover | EBA

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While the intent behind financial wellness programs in the workplace is good, they’re not having the desired impact the American workforce desperately needs. We’ve been trying to solve the wrong problem all along.

Before diving deeper, let’s review a few unsettling — and instructive — statistics:

Did you know that there was a 78% increase in tweets about personal finance from 2021 to 2022, according to the 2022 Twitter Conversations Report?

Or that there was a 229% increase in the number of states requiring financial education since 2017 as part of the required high school curriculum?

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The data shows that access to financial education is at its highest in history. However, the public is still not acting responsibly. Credit card debt is at its highest ever, surpassing $1 trillion with each person owing an average of $7,951. Financial stress also is at its highest level since the Great Depression.

As many as 92% of employees experience financial stress, according to a survey done last year, which is an increase of 41% since 2021. Many studies will show that financial stress is American’s top stressor.

In an ideal world, the two trends should have an inverse relationship; meaning greater opportunities and access to financial education should lead to decreased financial stress. However, all we see is mounting evidence to the contrary.

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The reason this is not happening as previously suggested is because we’re addressing the wrong problem. This is not a budgeting, spending or income problem. It’s an emotional and behavioral one.

Until the right problem is examined, everyday working Americans will continue to bring their financial stress from home to work — leading to lost productivity, lowered engagement, decreased focus and drops in performance.

If an employee is carrying less financial stress and in a state of good health physically, we know they will tend to have fewer sick days. If they are under less stress emotionally, we know that they can then be more creative, innovative, present, meet company goals and be more productive at work.

It’s important to understand that our money challenges are neither logical nor rational. They are very emotionally driven. These challenges hark back to our family of origin and childhood formative years when our subconscious brain develops at a rapid pace.

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In fact, a University of Cambridge study determined that money habits are formed and set by the time we turn 7 years old. All the experiences, influences and exposures that happened in those early years become hardwired into our brain and impact every little bit of how we behave with our money as adults.

Ironically, the human brain is actually part of the problem. We actually have a very logical mind, but the problem is we rarely use it. Brain activity is 95% subconscious, so most of our decisions, feelings, actions, behavior and emotions are driven by this state and transcend conscious awareness.

Physician and neuroscientist Paul D. MacLean came up with the Triune Brain concept, which views the brain as three functional layers. The first, known as the primal brain, is wired to react, desire and survive. The second, known as the emotional brain, is where all of our emotions, memories and experiences are stored. It’s essentially a hard drive filled with files from every single aspect of our history. The final layer is the thinking brain where our rational, logical and higher state of consciousness happens.

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The thinking brain is where good, sound and rational money decisions are made but the problem is the primal and emotional brains get triggered often in a negative way. This causes us to make irrational and impulsive money decisions.

The reason for all the money stress people are experiencing is because they are reacting to an emotional trigger vs. being able to respond to it with sound logic.

One of the most common money issues are fear and shame. Fear of running out of money or not having enough of it can manifest as someone who checks their bank account 20 times a day. Another manifestation of this fear is a reluctance to spend money on basic needs.

People also feel shame about spending money because they often tend to buy more than they can afford. One example could be someone who frequently struggles with spending wildly despite putting themselves on a budget, filling them with shame once they reflect on what they did and check their accounts.

These emotional problems can’t be solved with a practical solution.

The vast majority of financial wellness programs available in the marketplace today focus on the nuts and bolts of personal finance: budgeting tools, cash flow strategies, comprehensive 401(k) offerings, debt consolidation options and the like.

These offerings tend to provide employees with instructions on “what” they should do with their money and “how” they should do it rather than focusing on “why” they’re financially stressed in the first place.

Humans are emotional beings whose behavior is driven by feelings. In order to leave behind financial stress for good and take steps to a healthy money relationship, it’s important to address the emotional and behavioral money dynamics that drive everyday money decisions.

Benefit advisers need to help their employer clients develop a financial wellness program that is holistic in nature and focuses on why people act, think, behave and feel the way they do about their money. Otherwise, these programs will only continue to act as a bandage and never address the true reason behind why so many people are financially stressed.

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