group of people putting hands on hands Financial wellness platforms that can adapt to each user’s financial situation and stage of change are especially effective. (Photo: Shutterstock)

Any organization putting forth the time, effort and expense to launch a financial wellness program wants to help its employees make lasting behavior changes that improve their health, wealth and happiness.

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

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

But for most everyone, financial behavior is unconsciously driven 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 the term “money script” to describe our core beliefs about money. Money scripts “are typically unconscious, developed in childhood, passed down from generation to generation within families and cultures, contextually bound, and often only partial truths.”

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

But because of our emotionally charged money scripts, financial wellness programs based purely on knowledge and rational thought won’t create long-term behavior change.

The most effective programs integrate behavior-change theories rooted in psychology, including Social Cognitive Theory, Positive Psychology, the Transtheoretical Model and gamification.

Social Cognitive Theory

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

1. Behavioral capability: The ability to perform a behavior by knowing what to do and how to do it. People learn from the consequences of their behavior, which also affects the environment in which they live. 2. Observational learning: Reproducing behavior observed from others, i.e. behavior modeling. 3. Reinforcements: Responses to a person’s behavior affect the likelihood of it continuing. 4. Expectations: People anticipate the consequences 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 his or her ability to behave a certain way. This is different than self-confidence because it is task specific.

Psychologist Albert Bandura developed SCT and the concept of self-efficacy, which researchers have linked to financial behaviors such as credit management and retirement investing. A study published in 2015 found that higher levels of self-efficacy were directly related to saving more money.

Positive Psychology

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

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

Research has shown that people with a positive outlook are more successful in all facets of life, including their job, finances and relationships. They tend to approach stress as opportunity rather than debilitating.

Even more, studies over the past two decades shows that happiness raises intelligence, creativity, memory and social connection 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 the late 1970s. The study concluded that smokers could quit only when they were ready, which led to this learning model that focuses on the decision-making process to achieve intentional change. TTM is built on the assumption that people do not make changes quickly or decisively.

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

1. Precontemplation: They don’t view current behaviors as a problem or see any benefits to change, so they have no intention of making immediate changes. For some people, this could be called denial. 2. Contemplation: Even though they fear change, they intend to make changes within the next six months. 3. Preparation (Determination): They start to believe behavior change will have positive results and begin taking small steps toward that change. 4. Action: They’ve made changes and want to continue and even escalate the behavior modification. 5. Maintenance: They have made consistent changes for more than six months and seek to continue the positive behaviors.

Financial wellness platforms that can adapt to each user’s financial situation and stage of change are especially effective. These platforms can emphasize the benefits of change, and consequences of not changing, to motivate those in the precontemplation, contemplation and preparation stages. For those in the action and maintenance stages, the platforms can focus on monitoring progress and planning ahead for potential obstacles.


Gamification is the relatively new term that refers to using game elements in non-game environments. Focusing on the human desire 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. Gamification spurs learning engagement by satisfying the human need for recognition, reward, status and achievement. It also fosters a sense of community and emotional connection and has been proven to relieve stress. Studies have shown that education and training using gamification results in measurably higher skills and knowledge.

Long-term change

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


Kris Alban is executive vice president of iGrad, a San Diego-based company that provides interactive, personalized financial wellness solutions to employers, financial institutions, colleges and universities.