How Financial Stress Effects Employees and What You Can Do to Help
Today’s workforce is struggling financially. Significant student loan debt, rising healthcare costs, and aging parents are some of the financial challenges modern employees face. Financially stressed employees are less productive and motivated at work. In today’s post, we’ll explore the reasons your team is financially stressed and provide actionable strategies you can leverage to improve your team’s financial wellness.
What is Employee Financial Wellness?
Financial wellness is an employee’s current and perceived future financial state. The US Consumer Financial Protection Bureau describes financial wellness as a state of being when an employee:
- Has control over day-to-day and month-to-month finances
- Has the savings to handle an unexpected financial burden
- Is on track to meet short and long-term financial goals
- Has the financial freedom to make choices that allow them to enjoy their life
When an employee is financial well they have:
- Freedom from financial stress
- Freedom from the worry of being unable to handle unexpected expenses
- Freedom from debt
- Freedom to make choices to enjoy life
Financial wellness is not about earning a certain amount of income, it’s about managing one’s income and debts in a healthy way.
Why Your Employees are Financially Stressed
Today’s workforce is struggling financially. According to CNN Money, 70% of Americans live paycheck-to-paycheck. Some sources of employee financial stress include:
- Retirement plan leakage (using retirement funds for other purposes)
- Unexpected emergency expenses
- Caring for aging parents
- Student loan debt
- Rising healthcare costs
How Does Financial Wellness Effect Your Business
Having a financially stressed team can have a negative impact on your bottomline. Financially stressed employees are less productive and less motivated at work. Companies that don’t invest in their team’s financial wellness can face negative consequences like:
- Lower productivity: according to Pensions Consultants, financial troubles can decrease employee productivity by as much as 20 hours per month.
- Higher turnover: financially unwell employees are more likely to be actively seeking other job opportunities.
- Higher healthcare costs: according to Gallup, 30% of employees have put off medical treatment because of the cost.
On the other hand, companies that invest in their team’s financial wellness enjoy benefits such as:
- Increased employee engagement
- Increased employee productivity
- Reduced turnover
- Reduced absenteeism
- A happier, healthier workforce
Understand Your Team’s Financial Wellness
In order to address financial wellness needs, it’s important to understand the factors that effect your team’s financial stress.
What factors effect your team’s financial wellness:
- Retirement health: the quality of your company’s retirement plan.
- Benefit quality: the quality of your company’s benefits program.
- Employee behaviors: how well your employee handle their money.
Key areas to help your team achieve financial wellness:
- Saving for emergencies
- Debt elimination
- Retirement planning
What You Can Do to Help You Team Tackle Financial Stress
Educate Employees on Your Benefits Program
Your employee benefits program is typically one of your business’ largest costs, yet many employers do a lackluster job of educating employees on their benefits package. Providing an enrollment guide is a good start but often isn’t enough to help employees select the benefits that are right for their needs. Providing an online benefits enrollment platform or hosting an in-person enrollment education session are great ways to better educate your employees on your benefits offerings.
Offer a Student Loan Repayment/Refinancing Program
Today’s workforce is made of primarily Millennials, most of which struggle with substantial student loan debt. Helping your workforce better finance and pay-off their student loans can have a big impact on their financial wellness. Nowadays companies can offer student loan refinancing plans or even make financial contributions to paying down their employees’ student loan debts. There are several tools on that market that facilitate student loan repayment programs including Peanut Butter, Tuition.io, and Gradifi.
Provide Access to a Financial Advisor or Money coach
Many employees lack the knowledge on how to budget and set financial goals effectively. Providing access to a financial advisor or money coach can help your employees make more informed decisions about how they’re handling their finances.
Offer an Employee Discount Program
Employee discount programs are a great way to help your employees save money on every day expenses, allowing them more financial freedom. At Launchways, we offer our clients’ employees discounts through our partnership with LifeMart. By helping your employees cut their expenses on their phone, groceries, gas, and more, you can allow them more funds to save or invest.
Provide access to a Financial Literacy App or Tool
Nowadays there are several platforms on the market that provide financial education and tools for employees. Financial literacy mobile apps can provide your employees budgeting tools, investment education, and even access to financial experts on-demand. An example of an employee financial wellness platform is Holberg Financial.
About the Author
Carolyn Kick is the Director of Marketing at Launchways. Launchways helps growing businesses better approach the people side of their business through strategic solutions for human resources, employee benefits, and business insurance.