Handling your finances can be challenging, especially for employees. Not only are workers losing sleep at night because of looming debts or financial insecurity, but the negative impact of those issues is also spilling over into the workplace.
Research commonly suggests that poor financial health affects employees’ overall mental and physical wellness and workplace performance.
Yet you aren’t powerless. Employers can address these issues by taking action to grow a healthier, wealthier workplace.
How financial health affects workers
An employee’s financial situation can affect them in many different ways. Even if they aren’t immediately hindered by a looming debt or struggling with their monthly bills, the fear of having to face those issues is often stressful enough.
A PricewaterhouseCoopers report (for employees earning less than $75,000/yr) found that:
- 54% of employees are frequently worried about not having enough emergency savings.
- 35% are worried about not meeting monthly bills/expenses, and
- More than 25% were afraid of not being able to retire when they wanted to.
The result is that many employees are stressing out over their finances, as the American Psychological Association found that 72% of working adults are commonly stressed about money, while 22% experience extreme financial stress.
How financial health impacts the workplace
As more research is surfacing on financial wellness, companies are now seeing a strong relationship between financial stress and overall workplace performance.
A study done by Willis Towers Watson revealed that employees struggling with their finances lose 41% more work time because of absence than their peers without financial issues. Those with financial struggles had lower engagement levels, about 29% engagement than 51% for those who aren’t struggling with money.
These effects of poor financial health begin to eat into a company’s bottom line. The aforementioned PWC report found that almost 50% of employees worried about their finances missed work occasionally, resulting in an annual loss of $3.3 million for companies with over 10,000 employees. For smaller businesses, these losses can be even more significant.
What can employers do?
There are various initiatives that companies can take to help their workers become better equipped to handle their financial situations. It comes down to more than just a paycheck; employees need the tools to manage their money wisely.
While there is no “one size fits all” solution to eliminating employee financial stress. Targeting their overall financial health by deploying personal finance wellness coaches (not commission compensated financial advisors) and other voluntary programs are known to be effective ways of addressing this looming issue. Find the right approach to improve your employees’ financial wellness, and in turn, your company’s bottom line.