Money has traditionally been one of those “taboo” workplace topics. But finances are now one of the biggest sources of employee stress, often leading to lower productivity and engagement on the job. In this week’s blog we talk about what happens when employees are stressed about finances and how employers can help with this important aspect of well-being.
What is financial stress in the workplace?
Financial stress looks different for everyone. For some employees, it’s related to credit card debt, student loans, or the rising cost of groceries and gas. Older employees may be stressed about having enough money saved for retirement. Others may worry about mortgages, college tuition, or medical bills.
Whatever the source, the stress is real. According to the American Psychological Association’s March 2022 Stress in America survey, stress related to money and inflation is at the highest level recorded since 2015. The study found that the vast majority of adults (83%) say inflation is a source of stress, as are the economy (69%) and money in general (66%).1
Younger generations, in particular, are stressed about finances. The Deloitte Global 2022 Gen Z and Millennial Survey found only around half of Gen Zs (47%) and millennials (55%) feel they can comfortably pay their living expenses each month.2
What happens when employees are stressed about finances?
Since it’s virtually impossible to separate our personal and work lives, stress about finances often seeps into the workday, leading to:
Distraction and reduced productivity.
A survey by financial services provider SoFi at Work and HR research advisory Workplace Intelligence found employees spend around 25% of their workweek dealing with financial issues.3 This distraction can take a toll on productivity. In fact, a 2017 Mercer study found that for a company of 10,000 employees, distraction due to financial stress could translate to 1,922 hours and $28,830 in lost productivity every week. The same study noted that employers report $250 billion lost each year due to stressed employees at work.4
Lower engagement and retention.
When employees are experiencing financial stress, engagement and morale can suffer. A 2019 MetLife survey found that employees who felt good about their financial health were happier (84% vs. 55%) and more engaged (78% vs. 53%).5 There’s also the cost of turnover. If employees are stressed about their financial situation and don’t feel their employer is supportive, —leading to increased recruitment and training costs.6
Poor physical and mental health.
Financial concerns, like other sources of stress, can significantly impact physical and emotional health. According to the American Institute of Stress, effects may include increased irritability, mood swings, appetite changes and stomach issues, fatigue, and/or insomnia. If left unchecked, these symptoms can get worse and may lead to mental health concerns like anxiety, depression, or even suicide.
How employers can help alleviate financial stress.
Given the workplace impacts of financial stress, it’s in every employer’s best interest to support employees in managing it. A Sofi study revealed that “improving employees’ financial well-being could have a ripple effect in driving increased worker productivity (86%), desire to stay with their employer (86%), job satisfaction and engagement at work (84%), ability to focus (84%), as well as improved mental (84%) and physical (80%) health.”7
And, employees increasingly expect employers to get involved. A recent Bank of America survey found 82 percent of employees feel employers should play a role in supporting their financial wellness.8 Here are some suggestions for actions employers can take:
1. Consider the financial wellness needs of all types of employees.
Your workforce likely includes people from different backgrounds, life stages and income levels. Some may want to pay off student loans or save for their first home; others are budgeting for a growing family, or planning for retirement. Low wage earners, who make up over 40% of the population, face unique concerns making ends meet, and may need short-term loans or real-time access to their earned but unpaid wages.9
Make sure to ask employees what they value in a financial wellness program through a pulse survey or focus group. And be sure to follow up with the actions you’ll take.
2. Take stock of the benefits you already have that employees may not be taking advantage of.
Chances are you already offer several programs that help employees with financial wellness—they just may not be branded as such. Make sure employees know about any 401(k) matches you offer; many 401(k) administrators also offer free financial education and resources. Remind employees about Health Savings Accounts, which allow them to save tax-free money for medical expenses in retirement. Your Employee Assistance Program likely offers lots of assistance with financial wellness, too, so urge employees to take advantage of it.
3. Offer a financial wellness program through an external vendor or package publicly available tools for a DIY approach.
Many companies choose to work with an external partner to offer a full suite of financial wellness tools, coaching, and education. These could include mobile apps to help with budgeting and saving, calculators to model savings for retirement, one-on-one sessions with a financial coach, or self-paced mini courses to teach personal finance basics. If budget doesn’t allow for a full-fledged program, promote resources available from the Consumer Financial Protection Bureau, National Credit Union Administration, America Saves, or the Financial Literacy and Education Commission.
4. Make sure employees know about your financial wellness resources.
Sadly, many employees do not know about all of the great benefits their company offers. So if you provide a financial wellness program, be sure to communicate it. A splashy launch followed by a regular cadence of communication will ensure that employees who aren’t quite ready to dig in to all the resources now will know just where to go when they do. It’s also important to reinforce that accessing financial wellness services is completely confidential, and the employer will not receive any personal information about its employees’ financial situation.
Financial wellness, just like physical and mental well-being, is a workplace issue, and one that will continue to impact employee productivity, health and engagement, especially in these uncertain economic times. For help devising a strategy to add financial wellness to your well-being program, contact us at firstname.lastname@example.org.