Is Addressing Money Trauma the Missing Piece in Your Employee Financial Wellness Program?
Addressing the psychological barriers to financial wellness may be the key to improving both workplace morale and retirement plan participation.
When we think about employee wellness, businesses often focus on physical health benefits, stress management programs and work-life balance initiatives. But there's a critical aspect of well-being that frequently goes unaddressed: The deep emotional relationship your employees have with money.
Understanding money trauma and its impact on financial wellness and financial decision-making can be a game changer for both employee satisfaction and retirement plan participation.
The hidden reality of financial stress
Money trauma refers to the psychological, mental and emotional responses caused by financial events that involve real or threatened financial harm. These symptoms can manifest as financial avoidance, denial about making healthy financial choices, difficulty managing finances and even intrusive thoughts about money.
Employees may be experiencing personal money trauma from various sources — growing debt, bankruptcy or significant life events like divorce or illness. Some may avoid opening bills, procrastinate on critical financial decisions or skip retirement plan enrollment altogether.
When these fears become overwhelming and cause persistent stress that leads to counterproductive behaviors, it may be time for professional support.
"Individuals who suffer from money trauma can have post-traumatic stress feelings as a reaction from dealing with money," says Jason Parese, senior director of retirement services education, ADP Retirement Services. "These feelings can be highly stressful, overwhelming, and can trigger negative financial behaviors that can sabotage financial goals and financial wellness."
Exploring supportive resources for money trauma
Experts recommend several strategies for overcoming money trauma. Building financial literacy and confidence through education can help people gain control over their money. And seeking support through trusted friends or family members can also be a valuable way to gain perspective and emotional relief.
Financial therapy is another option that's emerged as a specialized field combining therapeutic and financial expertise. And unlike traditional financial planning, which focuses on investment advice and financial tasks, financial therapy addresses the emotional and psychological aspects of money.
Making financial wellness a priority
Achieving financial wellness is crucial for the health of employees and businesses. Understanding money trauma—and how to treat it—is just the beginning.
Tune into ADP's Retirement Success Pod(k)ast episodes 34: Beyond the Numbers: The Emotional Side of Financial Well-Being and 35: Is Money Trauma Holding You Back? For expert discussions and practical advice that can help your team build stronger financial foundations. Share these resources with your plan participants and let them know that the Retirement Success Pod(k)ast is available on popular podcast platforms.
Learn more about 401(k) retirement plan solutions that can meet your business needs or call (800) 432-401K.
Learn more from Parese in ADP's Retirement Success Pod(k)ast episode, Beyond the Numbers: The Emotional Side of Financial Well-Being.
ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.
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