We all know how much havoc stress can wreak on your life. But do you know how much stress can negatively impact your business? Per Mental Health America, stress costs employers $500 billion in lost productivity, annually. Financial stress, in particular, has a significant adverse effect on both your employees and business as a whole.
According to the Financial Fitness Group, over 80 percent of employees have been affected by financial stress. This financial stress alone costs U.S. businesses close to $300 billion a year in unscheduled absenteeism, reduced employee productivity, and higher employee turnover.
Clearly, financial stress is wreaking havoc on your business. So what, as an employer, can you do to help employees dealing with financial stress. In this article, we’ll discuss the two leading sources of financial stress and its effects on your staff. Plus, we’ll define financial wellness, its benefits to a business, and how your company can improve its financial wellness plan.
2 Sources of Financial Stress
A 2018 survey from Bankrate found 69 percent of employees have lost sleep from time-to-time over something they’re worried about. And, the top concern for these employees was money. Another study by Enrich Financial Wellness delivered remarkably similar results.
According to the study, 49 percent of U.S. employees are concerned about their finances. Furthermore, 46 percent of employees consider finances their primary source of stress and 48 percent with financial stress are distracted at work. As an employer, it’s imperative to keep your employees safe and healthy.
Research has determined those losing sleep are more prone to both depression and anxiety. Depression and anxiety, in turn, wreak havoc on an employee’s life and productivity. Depression costs employers up to $44 billion annually, and an estimated 200 million lost work days each year. The cost from sleep deprivation is even more significant to the U.S. economy at an estimated $411 billion a year, according to the Rand Institute.
So, we know people are worried about their finances, but what, precisely, about their finances has people worried? Your employees are likely to be worried about either near-term expenses or retirement. Per BenefitsPro, 65 percent of employees report that keeping up with monthly expenses represents their biggest financial worry. On the other hand, 64 percent of employees worry about running out of money in retirement.
If you’re a millennial who’s just entered the workforce, chances are you’ll be more focused on reducing near-term expenses or paying down debt. But, as you age, you become increasingly likely to think of retirement expenses. Here’s the good news. The solution for both financial worries is the same…
What is Financial Wellness?
Financial wellness, per Financial Finesse, is a state of well-being where an individual has achieved minimal financial stress, established a strong financial foundation, and created an ongoing plan to help reach future financial goals.
How Can You Make An Effective Financial Wellness Program?
1. Provide an Initial Financial Test
There are several tips for employers to use to improve the effectiveness of their financial wellness program. The first is to give participants an initial financial assessment. A financial test can be an excellent learning opportunity for most employees. This exam can show staff where their financial strengths and weaknesses lie.
2. Basic Financial Education
It’s imperative your employees understand the fundamentals of money management, so they have enough information to make the right financial decisions. For example, do your employees know how interest rates work and the power compound interest over time in their retirement savings?
A recent study from the FINRA Foundation pointed to just how necessary financial education is. According to the study, two-thirds of Americans would fail a financial literacy test. Regardless of the specific program, education is the best way to improve employee engagement with an employee benefit.
3. Create a Budget
Per, BenefitsPro, one of the best things your employees can do to learn more about their financial situation is also one of the easiest: create a budget for yourself. A budget allows workers to see precisely where their money is going each month. This information helps individuals understand where they can cut back, and save money, in the future.
4. Provide a Financial Coach
A crucial step when creating a financial wellness plan is to provide employees access to a financial coach. There’s a cornucopia of free or cheap financial resources available. But none quite compare to the power of an unbiased, experienced financial guide.
Financial coaches give your employees confidence in a field that is otherwise full of doubt and second-guessing. These coaches give workers an outlet to discuss their ideas, or questions before they take any concrete actions. This coaching works to build confidence in your: financial knowledge, decision-making, and goal setting.
5. Make Education Flexible
Flexibility is vital for the success of your financial wellness program. The more you can personalize your program for every individual, the more effective it is. There are several actions your firm can take to make your financial wellness plan more flexible.
First, create different types of educational tools, with different content, for different generations. People prefer to learn via different methods. Some are visual learners, whereas others prefer an audio lecture. Similarly, we’ve already covered how different generations tend to have different financial goals.
So, for millennials, it makes sense to use online and mobile-accessible programs which cover topics such as debt management or student loan repayment. For baby boomers, physical content such as worksheets or flyers that focus on saving for retirement is likely to be most effective.
Whether your employees are worried about near-term expenses, or their retirement, chances are they could both benefit from participation in a financial wellness program. These programs can help reduce employees’ financial stress, boost productivity, improve employee engagement and retention, and reduce healthcare costs.