In today’s environment, employees want more control over the allocation of their rewards. Traditional benefits packages often leave some workers with unused perks. Others instead bemoan the lack of support in key areas like mental health or student loan repayment. Some even prefer greater professional and skills development. To meet these diverse expectations, HR leaders are turning to flexible benefits allowances.
Sometimes referred to as benefits wallets, and other times known as lifestyle spending accounts, these allowances give employees the freedom to allocate their total rewards budget across options such as health insurance, mental wellness services, financial planning assistance, professional development, or lifestyle perks.
What Is a Benefits Wallet?
A benefits wallet is a defined allowance or points system that employees can spend on a menu of benefits. Rather than offering a rigid set of perks, employers provide a set dollar amount or credits that employees can apply toward their preferred options such as fitness memberships, mental health apps, childcare subsidies, or home office equipment. The goal of such a system is to create a more personalized and flexible total rewards experience that recognizes the diverse needs of a modern workforce.
Why Are Flexible Benefits Allowances Useful?
More than ever, employees expect all aspects of their employer to align with their values and goals, and total rewards are no different. When employees have the flexibility to select benefits that fit their lifestyle, their satisfaction and usage of those benefits improve.
Since it inherently is built for flexibility, a benefits wallet can include a myriad of options like student loan repayment, emergency savings, professional development funds, mental health services, and wellness apps. All of these serve an employee’s financial and emotional wellbeing. This approach also allows HR teams to adapt quickly to changing workers’ needs. For example, hybrid work and remote arrangements are continuously evolving. Now, human resources can reallocate these allowances instead of overhauling their entire benefits program or miss out on emerging trends.
How to Create a Benefits Wallet Strategy?
First, define your budget and categories. Then, determine the total amount of credit value each employee should receive. Some categories are core, such as health insurance, while others are elective, such as gym memberships or tuition reimbursement.
A truly unique and desirable benefits wallet program will have a mix of traditional and innovative benefits. Some common items include mental wellness, financial coaching, and lifestyle benefits.
Finally, building a solid flexible allowance is not enough. Employees need clear instructions about how the wallet works and how to select benefits. Use clear language and provide examples. Then, provide year round education as modern total rewards programs emphasize continuous communication rather than a once a year push.
Technology can streamline administration and adoption. Digital total rewards platforms allow human resources teams to showcase these flexible allowances within personalized dashboards. Since benefit allowances are inherently flexible, employees can see their usage adjust in real time, allowing them to best keep track of how much is left in their wallets. Some systems can even integrate directly with payroll providers to populate individual allowances automatically.
Once the program is in place, track utilization and engagement data to see which options are popular and which are underused. Feedback will help you adjust the menu and budget over time, and interactive total rewards statements provide analytics on employee engagement that inform future decisions.
Integrate Benefits Wallets into Total Rewards Statements
To ensure your benefits wallet program delivers on its promise, integrate it into your total rewards communication strategy. Digital statements allow you to highlight the value of the wallet alongside all your other benefit offerings such as salary, bonuses, and retirement contributions. This way, you can present a comprehensive view of compensation and benefits.
Utilize a multimedia strategy. Allow employees to see their remaining allowance balance and explore available benefits while watching explainer videos from leadership.
Experiment with templates, adjusting categories and line items. Presentation is just as important for engagement as the offerings themselves, so display benefits wallet information in a way that aligns with your brand.
Flexible benefits allowances are reshaping the way organizations deliver total rewards. By adopting a benefits wallet strategy, you empower employees to choose perks that support their unique lifestyle, improve engagement, and promote holistic wellbeing. When paired with digital total rewards statements, your benefits wallet becomes a dynamic part of a cohesive compensation story. Use this to showcase the full value of your compensation offerings and reinforce your commitment to your people.
