It’s no secret that many American workers have been experiencing financial difficulties in recent years. According to a 2023 LendingClub report, 60% of Americans live paycheck to paycheck, including more than 40% of high-income earners. With financial stress impacting employee performance, experts predict that by 2026, nearly half of employers will adopt a formal financial wellness benefits program.
This creates opportunities for financial institutions to work closely with business clients to develop a robust financial wellness benefits initiative. As a trusted partner, your expertise can guide the educational content and services impacting people’s money management.
Trends in Financial Wellness Benefits
Financial wellness programs help people learn about how money works and enable them to put that knowledge into practice. Using a two-fold, complementary approach, they aim to get employees to practice sound financial management for immediate and long-term goals.
Five types of financial wellness benefits are expected to gain momentum in 2025.
Education Programs
Educating people on financial matters is crucial to financial management. Workplace financial wellness programs can cover subjects that include:
- Understanding spending behavior and patterns
- Budgeting personal and household expenses
- Setting financial goals
- Planning and budgeting for healthcare expenses
- Reducing and eliminating debt (including student loans)
- Building a retirement portfolio
Each person faces different challenges and is at different phases in their life. By covering diverse topics, you can meet workers where they’re at. Offering variety and putting together a well-rounded education plan engages employees when they’re ready.
Health Savings Accounts
Health Savings Accounts (HSAs) can be pivotal in a financial wellness program. Devenir’s midyear report estimates that 38 million accounts were open in July 2024, and HSAs are projected to grow to 43 million accounts by the end of 2026. These represent a great opportunity for banks to grow deposits by serving the needs of HSA account owners.
HSA holders have a great tool for effectively budgeting and saving for out-of-pocket healthcare costs. HSAs offer tax-free contributions, tax-free withdrawals for qualified healthcare expenses, and tax-free interest and investment earnings. After age 65, account owners can also use HSA funds without penalty for any purpose, stretching their other retirement savings.
Once the account is established, employees own it for life, regardless of their insurance coverage or employment status.
One common concern is that some employees don’t fully understand how HSAs work. This results in them not taking full advantage of what the account offers. In addition to more traditional employee education materials, the award-winning The Adventures of Captain Contributor program can be a great resource. The program provides valuable tips and strategies for maximizing HSAs and other healthcare benefit accounts using an easy-to-understand, superhero-themed format.
Emergency Savings Accounts (ESA)
With Emergency Savings Accounts (ESA), employees automatically transfer some of their net pay directly into a designated savings account. By not first depositing the funds into their checking account or other spending instrument (e.g., payroll debit card), employees often find it easier to save.
The ability to handle a significant unexpected expense is considered a basic tenet of financial well-being. Yet a 2023 NerdWallet online survey found that less than half (45%) of Americans could cover a $1,000 emergency expense without turning to a credit card or loan.
The Consumer Finance Protection Bureau estimates that nearly a quarter of consumers (24%) have no savings for emergencies. Nearly four in ten (39%) have less than a month’s income, and only 37% have more than a month’s pay, stashed away for emergencies.
Earned Wage Access
Earned Wage Access (EWA) allows workers to access a portion of their wages before payday without paying additional fees. Established in some European countries, “on-demand pay” is gaining popularity in the U.S., particularly among younger workers.
A 2022 ADP study found that 76% of U.S. employees say it is important for their employer to offer EWA. CloudPay data shows that the most frequent EWA users are Gen Z (42%), Millennials (41%), and Gen X (14%).
An EWA option allows workers more flexibility in managing their financial needs and can increase job satisfaction. It can assist overall financial wellness by helping employees avoid predatory payday loan vendors that charge exorbitant fees. Finally, an EWA option can help banks establish and improve relationships with underbanked and unbanked adults.
Educational Assistance Programs
Educational assistance programs are another financial wellness benefit that is increasingly in demand. For employers looking to recruit and keep top talent, implementing a program such as student loan repayments or tuition assistance can be a game changer in a competitive hiring market.
According to the Society for Human Resource Management (SHRM), nearly half of employers offer undergraduate or graduate tuition assistance. Research shows that 86% of younger workers would stay with their company for at least five years if it provided help with student loans.
Under current legislation, employers can contribute up to $5,250 in student loan repayments per employee annually through December 2025. The payments are tax-free, whether issued to the loan provider or directly to the employee.
Financial wellness programs are becoming a must-have benefit (rather than a nice-to-have one) for many employees. As trusted experts in the financial services realm, banks and credit unions can help employer clients develop a program that includes robust learning resources and financial incentive tools. Making a positive impact on employee financial readiness is good for the economy, employers, and the financial services industry.