Financial concerns weigh on so many Americans, perhaps now more than ever. Worrying about finances can have serious physical and mental health repercussions and also lead to lower productivity and absenteeism in the workplace. April is Financial Literacy Month, so we recently spent some time with Kris Alban, Executive Vice President of iGrad (a WebMD Health Services partner), talking about financial stress and the toll it takes on workers—something that is even more relevant in the midst of a global pandemic.
If personal finances were a stressful topic before our current situation, we can only imagine the stress many people are feeling now. Is it the right time to talk to individuals about financial benefits?
Before the global pandemic, finances were already a major source of stress for most. In fact, recent Bank of America data shows that:
- 56% of employees are stressed about money;
- 53% of employees say stress interferes with work; and
- 83% of employees say financial benefits are critical to financial security.
To me, the current landscape of COVID-19 and the job instability and uncertainty it brings reinforces the importance of financial wellness. Many employees don’t have an emergency fund to cover basic living expenses. I think there is an opportunity here for employers to help employees with education on budgeting and saving. It’s a good way to show employees you care about them in good times and bad, and that you are listening to what’s stressing them out.
We’ve heard a lot about how millennials are struggling with student loan debt. What are some things that organizations can do to help with this burden?
We’ve found that one of the most frustrating and stressful aspects of paying back a student loan is the organizational part. With so many different institutions involved – from the lender to the servicer to the guarantor – it can be extremely confusing to know who to contact if you have a problem or need to make a change. So, simply providing organizational tools that pull in and consolidate all student loan data in one place can be a huge relief.
Some employers may also want to make loan consolidation services available so employees can look into lowering monthly payments. We also find that sometimes, as with a 401(k), setting up an auto withdrawal system lets people “set it and forget it.” Employers with a more robust budget might even consider matching the retirement contributions the employee makes with a corresponding student loan payment.
Let’s talk a little about women and the financial stress they are feeling. How do caregiving and other gender-related factors play into women’s overall financial health?
Well, there are a few things at play. First, there is the pay gap. Women make 81.5 cents for every dollar earned by a man. Then, when you add in the years they may take off for childbearing and childcare, and the career progression that likely suffers during this time, it becomes nearly impossible for women to catch up. To make things worse, women experience more time out of the workplace to care for aging parents and older spouses. There’s also the issue of longevity—women live on average five years longer than men, so they need to save more money for retirement. Women also accumulate more debt than men, especially student loan debt. Adding all this up it’s easy to see how these factors create an exponential difference between men’s and women’s financial health – and why women feel so much more stressed about finances.
To learn more on how concerns about finances vary between men and women download our whitepaper, How Well-Being Programs Are Failing Millennials and Women.
It’s becoming more well-known that a financially stressed employee is not a healthy or productive employee. Can you share a bit about the effect financial stress has on the workforce?
I’ll start by sharing a pretty shocking statistic: a survey by Salary Finance found that U.S. businesses are losing $500 billion a year because of employees’ personal financial stress.1 We can only guess what that dollar amount is today during the current pandemic. So, it’s most definitely hitting the bottom line, and employers are paying more attention to this issue.
A financially stressed employee is more likely to miss work, or to be present but not really there because they are distracted and worrying about their finances. Not to mention the time spent on the job calling creditors and banks.
From a health standpoint, research shows that financial stress causes digestive issues, headaches, fatigue, depression, anxiety, and a higher susceptibility of contracting viruses like cold and flu. We also know that people who are experiencing a lot of stress tend not to seek care when they should, setting up a situation where problems worsen and become more difficult and expensive to treat. So, it really is in an employer’s best interest to institute ways of helping employees cope with financial stress.
Aside from helping with student loan debt, what are some ways employers can make a difference when it comes to financial stress?
Well, I always caution employers who want to put a financial wellness program in place that they have to start first with some research into what employees want and need. Every population is different and it’s important to make sure you have a good grasp of what is causing financial stress for your employees. Typically, we recommend doing a survey which, in addition to giving you good insights, is again a way to show employees you care.
Some of the old standbys continue to be relevant – making sure employees are contributing to retirement plans and contributing enough to receive the maximum employer match. But we are seeing a lot more energy around helping employees with basic financial skills and education – like budgeting, how to establish an emergency fund, the time value of money, what pre- vs. post-tax contributions mean, etc. I feel that if we can get the right tools into employees’ hands we can help alleviate some of the stress they are feeling and give them some peace of mind that they have a plan. Sometimes even that can be a huge weight off their shoulders. I am hopeful that once we get back to a new normal, employers will continue to see financial benefits as an important way to support their employees.
WebMD Health Services has partnered with iGrad’s EnrichTM program to give individuals the resources they need to improve financial wellness. Want more information on how the iGrad EnrichTM program can help your employees? Contact us at email@example.com.
- On-Demand Webinar: Improving Financial Wellness in the Workplace
- Blog: Why Financial Wellness Matters
- Whitepaper: How Well-Being Programs Are Failing Millennials and Women