Financial wellness platforms that can adapt to eachuser's financial situation and stage of change are especiallyeffective. (Photo: Shutterstock)

Any organization putting forth the time, effort and expense tolaunch a financial wellness program wants to help its employeesmake lasting behavior changes that improve their health, wealth andhappiness.

The problem is that few organizations know what works, let alonehow to create a program to achieve it.

Many financial wellness programs use an approach that isfact-focused and based on unbiased, rational thought.

But for most everyone, financial behavior is unconsciouslydriven by emotions. We each have a complex relationship with money,one that can be fraught with guilt, shame, fear and envy.

Financial psychologists Bradley Klontz and Ted Klontz coined theterm "money script" to describe our core beliefs about money. Moneyscripts "are typically unconscious, developed in childhood, passeddown from generation to generation within families and cultures,contextually bound, and often only partial truths."

The good news, according to research, is that negative financialbehavior can be changed.

But because of our emotionally charged money scripts, financialwellness programs based purely on knowledge and rational thoughtwon't create long-term behavior change.

The most effective programs integrate behavior-change theoriesrooted in psychology, including Social Cognitive Theory, PositivePsychology, the Transtheoretical Model and gamification.

Social Cognitive Theory

Social Cognitive Theory (SCT) emphasizes observational learning,imitation and modeling for goal-specific, long-term behaviorchange. The central tenet of SCT is Reciprocal Determinism, thedynamic and reciprocal interaction between a person's environmentand behavior. SCT is built on the following:

1. Behavioral capability: The ability toperform a behavior by knowing what to do and how to do it. Peoplelearn from the consequences of their behavior, which also affectsthe environment in which they live. 2. Observationallearning: Reproducing behavior observed from others, i.e.behavior modeling. 3. Reinforcements: Responses toa person's behavior affect the likelihood of it continuing.4. Expectations: People anticipate theconsequences of their actions before engaging in the behavior,which can influence whether the behavior occurs. 5.Self-efficacy: The level of confidence a person has in hisor her ability to behave a certain way. This is different thanself-confidence because it is task specific.

Psychologist Albert Bandura developed SCT and the concept ofself-efficacy, which researchers have linked to financial behaviorssuch as credit management and retirement investing. A studypublished in 2015 found that higher levels of self-efficacy weredirectly related to saving more money.

Positive Psychology

Positive Psychology, founded by psychologist Martin E.P.Seligman, Ph.D., approaches change not from the perspective ofdifficulty, but rather from using strengths to create positiveexperiences. Seligman, who has written three best-selling books onthe topic, used scientific methods to learn how the most satisfiedand fulfilled people approached life.

He concluded that happiness has three dimensions that can becultivated: the Pleasant Life (savor/appreciate basic pleasures),the Good Life (discover/use virtues and strengths) and theMeaningful Life (find fulfillment by using virtues/strengths forgreater purpose).

Research has shown that people with a positive outlook are moresuccessful in all facets of life, including their job, finances andrelationships. They tend to approach stress as opportunity ratherthan debilitating.

Even more, studies over the past two decades shows thathappiness raises intelligence, creativity, memory and socialconnection while preventing depression and anxiety.

Transtheoretical Model

Also known as Stages of Change, the Transtheoretical Model (TTM)originated from a study of people trying to quit smoking in thelate 1970s. The study concluded that smokers could quit only whenthey were ready, which led to this learning model that focuses onthe decision-making process to achieve intentional change. TTM isbuilt on the assumption that people do not make changes quickly ordecisively.

According to this model, the stages of intentional behaviorchange are as follows:

1. Precontemplation: They don't view currentbehaviors as a problem or see any benefits to change, so they haveno intention of making immediate changes. For some people, thiscould be called denial. 2. Contemplation: Eventhough they fear change, they intend to make changes within thenext six months. 3. Preparation (Determination):They start to believe behavior change will have positive resultsand begin taking small steps toward that change. 4.Action: They've made changes and want to continue and evenescalate the behavior modification. 5.Maintenance: They have made consistent changes for morethan six months and seek to continue the positive behaviors.

Financial wellness platforms that can adapt to each user'sfinancial situation and stage of change are especially effective.These platforms can emphasize the benefits of change, andconsequences of not changing, to motivate those in theprecontemplation, contemplation and preparation stages. For thosein the action and maintenance stages, the platforms can focus onmonitoring progress and planning ahead for potential obstacles.

Gamification

Gamification is the relatively new term that refers to usinggame elements in non-game environments. Focusing on the humandesire for mastery, achievement, competition, learning and play,gamification can include rewards, achievement levels, badges,leaderboards, progress measurement and prizes.

It's about more than just playing games, however. Gamificationspurs learning engagement by satisfying the human need forrecognition, reward, status and achievement. It also fosters asense of community and emotional connection and has been proven torelieve stress. Studies have shown that education and trainingusing gamification results in measurably higher skills andknowledge.

Long-term change

Employers of all sizes are realizing the importance of financialwellness programs. But not all are created equal. Adaptive,interactive platforms using proven behavior-change theories will bemost effective in helping employees achieve financial wellness thatwill last a lifetime.

Kris Alban is executive vice president ofiGrad, a SanDiego-based company that provides interactive, personalizedfinancial wellness solutions to employers, financial institutions,colleges and universities.