Financial Wellbeing at Work: Why Financial Stress is Draining Your Employees (and How to Fix It)

Financial Wellbeing at Work: Introduction

“Financial Wellbeing at Work” has become an increasingly important topic of conversation amongst office workers, managers, HR leaders, wellbeing managers, and even CEOs. Recent surveys show that over half of employees live payday to payday, with little to no savings for emergencies or retirement. This lack of financial wellbeing takes a significant toll on workers and employers alike. Stress over money has been called the top distraction at work today.

With wages stagnant and the cost of living rising, it’s no wonder workers are financially strapped. Employers have a vested interest in helping improve their financial wellbeing. There are many ways companies can step up to educate, empower and support employees to take control of their finances. From financial education programs to competitive benefits packages,organisations can make a meaningful difference in the lives of their workforce.

This article will explore the impacts of and solutions for financial wellbeing at work. It will provide employers with actionable steps to foster a culture of financial security. Helping employees manage their money effectively isn’t just good for them, it’s good for business. Read on to learn more.

Let’s Define Financial Wellbeing at Work

Financial wellbeing at work refers to an employee’s overall financial health and stability. It goes beyond just their income or compensation to encompass how they manage their financial lives more broadly. Employees with strong financial wellbeing are able to meet current and ongoing financial obligations, feel secure about their financial future, and make choices that allow them to enjoy life.

Specifically within a workplace context, financial wellbeing involves:

• Having sufficient income and resources to cover expenses without chronic financial stress or hardship. This includes having emergency savings, manageable debt loads, and adequate insurance coverage.
• Possessing the financial literacy and skills to understand options and make sound money management decisions. For example, being able to create and stick to a budget, understand investment and retirement accounts, avoid predatory lending practices.
• Having access to competitive pay and benefits. This includes fair wages, pension plan options, paid holidays, and other compensation that provides for basic needs and financial security.
• Feeling in control of finances. Employees with good financial wellbeing feel empowered over their money rather than anxious. This gives them a sense of confidence and flexibility in using their resources intentionally.
• Having a positive outlook on the future. Financially well employees are optimistic that they can achieve future goals like buying a home, getting out of debt, saving for retirement or their children’s education.

As financial lives impact all other aspects of life, employee financial wellbeing has wide-ranging effects on workplace culture and success.

The Costs of Poor Financial Wellbeing

Financial stress can take a significant toll on employees and employers alike. Studies have shown that employees experiencing financial hardship are less engaged, less productive, and more likely to leave their jobs.

• According to a survey by PwC, 4 out of 5 employees are stressed about their finances. Of those, nearly half say that financial concerns have distracted them at work.
• Financially stressed employees reported higher rates of burnout, absenteeism, and lack of engagement.
• Employees might spend work time worrying about money or dealing with financial issues instead of working.
• High financial stress leads to higher turnover. Replacing employees can cost upwards of one-half to two times the employee’s annual salary.
• Employees’ financial problems negatively impact businesses’ bottom lines. Financially stressed employees are less motivated, miss more workdays, and are more likely to leave their jobs – all factors that result in real costs for employers.

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How Employers Can Promote Financial Wellbeing

Employers play a crucial role in supporting employees’ financial wellbeing. There are several effective strategies and best practices companies can implement:

• Offer financial education resources and seminars on topics like budgeting, debt management, investing, and pension planning. Provide access to financial advisors for one-on-one consultations.
• Incorporate financial wellness into health and wellness programs. Stress management, for example, is tied to financial worries.
• Structure student loan assistance programs. Offer matching contributions to student loan payments.
• Offer competitive compensation, salaries, and benefits packages. Ensure wages allow for meeting cost of living needs.
• Implement inclusive hiring practices and training programs to increase employees’ earning potential long-term.
• Allow flexibility in scheduling and remote work to help employees manage expenses.
• Limit unnecessary expenses on-site, like lavish office spaces. Invest in employees’ essential needs instead.
• Establish a workplace culture that reduces financial stresses. Institute policies that prevent overwork and burnout.
• Confidentially survey employees to assess their unique needs. Use feedback to expand financial wellness offerings.
• Track stress levels, absenteeism, turnover, and productivity to measure program impact over time. Adjust strategies based on insights.

By taking a strategic approach to employees’ financial wellbeing at work, companies can empower people to take control of finances, prepare for the future, and gain peace of mind. The benefits also boost engagement, retention, and performance for the organisation.

Financial Education

Financial education in the workplace is vital for empowering employees to make informed financial decisions and take control of their finances. Many employees struggle with budgeting, managing debt, understanding investments and taxes, and planning for major goals like mortgage, university loans, and pensions.

Companies can promote financial literacy and capability among their workforce by offering financial education resources, tools, and training. This not only benefits employees in their personal lives, but also helps improve productivity, engagement, and retention for the employer.

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Some ways employers can provide financial education include:

• Hosting educational seminars and workshops. Lunch-and-learn sessions or webinars can cover topics like budgeting, saving, investing, tax planning, paying down debt, and understanding employee benefits. Consider bringing in financial experts or partnering with a local non-profit.
• Offering one-on-one financial counseling. Provide access to financial advisors to help employees assess their full financial picture and create actionable money management plans. Counseling services can be offered on-site or virtually.
• Distributing educational materials. Share guides, checklists, videos and other resources that explain key financial concepts in easy-to-understand language. Make materials available in multiple formats.
• Promoting financial wellness apps and tools. Curate a list of secure, user-friendly apps and digital tools employees can use to budget, manage debt, save for goals, invest, and more. Consider subsidising premium tools.
• Teaching through email campaigns. Send regular, short personal finance tips focused on topics like avoiding fees, consolidating debt, boosting credit score, and avoiding impulse purchases. Keep tone positive.
• Gamifying learning. Incorporate games, contests, challenges and rewards to engage employees in learning personal finance skills. This can help make topics fun and approachable.

Providing financial education at work demonstrates an employer’s commitment to employees’ overall wellbeing. It equips workers to take control of their financial lives and pursue their goals. Employees who feel financially secure are better able to be present and excel at work.

Financial Wellbeing at Work: Budgeting & Debt Management

Budgeting and managing debt are critical to achieving financial wellbeing. Here are some tips and strategies for employees:

• Track your expenses. Use a budgeting app or spreadsheet to monitor where your money is going each month. Identify areas where you can cut back on unnecessary spending.
• Pay down high-interest debt first. If you have credit card balances or other debts charging high interest, focus on paying those down aggressively before other debts. This will save money on interest.
• Build an emergency fund. Having 3-6 months’ worth of living expenses in savings will help you avoid taking on new debt to cover unexpected costs. Automatically transfer a portion of each paycheck to savings.
• Look for ways to save on recurring costs. Examine your recurring bills for mobile phone, streaming platforms, internet, subscriptions, gym membership, etc. Contact providers to negotiate better rates or downgrade services.
• Meal plan and reduce food spending. Plan affordable meals in advance and make a grocery list. Buy store brand items instead of name brands. Limit take-aways and dining out.
• Reduce energy costs. Install smart thermostats, upgrade appliances and lighting, insulate your home, and take other steps to increase efficiency and lower utility bills.
• Avoid impulse purchases. Give yourself a mandatory waiting period for any unnecessary big-ticket items to avoid emotional purchases you’ll later regret.
• Consolidate higher-interest debts. Consider balance transfer credit cards or consolidation loans to reduce interest rates on existing credit card and other high-rate debts.
• Build extra payments into your budget. Make bi-weekly instead of monthly loan payments. Set aside bonuses or tax refunds to make extra debt payments.
• Seek free financial counseling resources. Non-profit credit counseling agencies can provide free budgeting assistance, debt management plans, student loan counseling, and general money management advice.

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Retirement Planning

Retirement planning is a crucial component of financial wellbeing. Many employees do not adequately plan for retirement and face significant financial hardship later in life. Employers can play an important role in facilitating retirement planning for their workforce.

Some ways employers can promote retirement readiness include:

• Providing retirement planning education – Offering classes, workshops or access to financial advisors to help employees understand retirement needs and options. Education should cover determining retirement income needs, investment strategies, and tax considerations.
• Facilitating retirement account enrollment – Making it easy for employees to enroll in pensions or other retirement savings accounts. This includes automatically enrolling new hires and setting up payroll deductions. Employers can provide matching contributions to incentivise participation.
• Increasing default contribution rates – Boosting default pension contribution rates to encourage higher savings rates. Automatically escalating rates over time is an effective strategy.
• Providing personalised projections – Supplying employees with individualised estimates of projected pension income and savings shortfalls. This motivates increased contributions.
• Allowing for catch-up contributions – Letting older employees make additional contributions, which helps in later earning years.
• Adding auto-portability – Automatically rolling over retirement savings when employees switch jobs.

A multi-pronged approach to facilitating retirement planning is key to improving financial outcomes for employees later in life. Employers should make this a priority element of financial wellbeing programs.

Workplace Compensation & Benefits

One of the most direct ways an employer can promote financial wellbeing at work is through fair and equitable compensation, as well as robust benefits. Employees who feel they are paid fairly for their work experience less financial stress. On the other hand, employees who feel underpaid may turn to high interest debt to make ends meet or exhaust their savings.

Benefits that provide a safety net against unexpected costs are also vital for financial wellbeing. Pension plans with matching contributions from the employer give employees a huge advantage in saving for the future.

Progressive employee benefits demonstrate that a company values its people as holistic human beings, not just workers. This builds loyalty, satisfaction, engagement, and retention. Benefits like parental leave, flexible schedules, and mental health support show the employer cares about big picture wellness. This allows employees to better manage their overall lives, reducing financial stresses.

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While wages and core benefits provide a foundation, voluntary benefits allow customisation for each person’s needs. Some may prioritise life insurance, identity theft protection, pet insurance, legal services, or critical illness coverage. Giving employees the agency to build their ideal benefits package is another way to enable financial wellbeing.

Building a Culture of Financial Wellbeing at Work

A business that prioritises wellbeing often sees improved retention and reduced costs. But financial wellbeing at work is rarely emphasised, at risk of seeming too intrusive. Yet money stress negatively impacts lives and work performance. Companies have responsibility to create a culture where financial wellbeing is normalised and destigmatised through:

• Open communication: Create safe spaces to talk about money, from leadership sharing struggles to open office hours with HR. Normalise money conversations without shaming.
• Financial education: Offer regular classes on budgeting, investing, and more, so employees learn healthy financial skills. Bring in experts or utilise online resources.
• Peer support: Encourage peer financial mentoring and coaching to share experiences. Lunch discussions or small groups allow bonding and advice sharing.
• Wellbeing programming: Integrate financial topics into general wellbeing initiatives like mindfulness or stress management. Show the connections.

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• Leadership commitment: Executives and managers should role model healthy financial talk and behavior. This gives employees permission to also prioritise finances.
• Policy review: Examine compensation, benefits, time-off and advancement policies through a financial wellbeing at work lens to identify gaps. Look at both short and long-term financial health.
• Resources: Provide access to financial counselors, advisors, education, tools and customised support to meet diverse needs. Be understanding when crisis strikes.

With finances destigmatised through cultural normalisation, employees gain agency over money matters. The whole workplace community can then thrive both financially and in overall wellbeing.

Financial Wellbeing at Work

Fostering financial wellbeing at work is not just beneficial—it’s essential. When we consider the impacts of financial stress on both individual employees and the organization as a whole, it becomes clear that this is an area deserving our attention and action.

We must remember, employees do not leave their financial concerns at the office door; they carry these burdens into their work, affecting their overall wellbeing. As employers, HR and wellbeing leads, it’s our collective responsibility to encourage and provide tools for financial wellness—educating employees about financial management, offering competitive remunerations and benefits, and creating an empathetic workplace culture that values financial security.

Elevate your workplace today

Don’t let financial stress impact the productivity and wellbeing of your employees any longer! It’s time to take control and invest in your team’s financial wellness with our comprehensive “Financial Wellbeing at Work” program from Wellbeing in Your Office.

Choose from our engaging conference-style introductory session or our in-depth 4-session workshop, both designed to help your employees develop a strong foundation, clarity, and confidence in managing their finances. Our programs cover crucial topics such as budgeting, debt-avoidance, planning ahead, and using digital tools to transform the way your employees handle their money. Empower your team to make the best use of their hard-earned income, build long-term financial resilience, and achieve freedom from money worries.

Remember, our approach is not about giving financial advice; it’s about equipping your employees with tried and tested principles, allowing them to make informed choices that lead to a more secure and fulfilling life. Investing in your employees’ financial wellbeing pays off with a happier, more focused, and engaged workforce.

Don’t wait any longer. Contact us today and bring the gift of financial peace of mind to your workplace!

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Disclaimer: The information provided in this article is intended for general knowledge and educational purposes only. It should not be construed as professional health, legal, or business advice. Readers should always consult with appropriate health professionals, human resource experts, or legal advisors for specific concerns related to mental health and wellbeing in the workplace. While every effort has been made to ensure the accuracy of the information at the time of publication, Wellbeing In Your Office cannot be held responsible for any subsequent changes, updates, or revisions of the aforementioned content.