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Financial stress can hit employees at any stage of their career. The anxiety that accompanies that stress can affect their mental wellness, which in turn can influence their productivity and workplace wellness.
For the sake of both employees and employers, it’s wise to understand workers’ money worries, particularly now when COVID-19 is causing even deeper financial concerns for many people. When the issues are understood, employers can take steps to ease employee financial anxiety, improving their overall mental and physical health, allowing them to focus on the tasks at hand in the workplace.
Why many employees battle financial stress and anxiety
The PricewaterhouseCoopers’ (PwC) 2020 Employee Financial Wellness Survey gives a helpful overview of what full time U.S. employees’ financial concerns are at the moment. The survey was conducted in January 2020, before the COVID-19 pandemic hit, but compiled after it became obvious the pandemic would further worry American workers about finances. So, the report from the survey focuses on the findings that are most relevant to the potential impact of COVID-19 on employees’ financial well-being.
What the survey found was that 38% of all employees are unprepared for a financial emergency, meaning they had less than $1,000 saved to deal with emergency expenses. Broken down by generation, Generation Z is the most unprepared with 68% of the youngest working adults not ready for unexpected expenses. Thirty-eight percent of millennials and baby boomers are financially unprepared for an emergency and 34% of Generation X does not have at least a $1,000 emergency fund.
Retirement finances can also cause stress in employees. Fifty-nine percent of the oldest workers, the baby boomers, have less than $100,000 in retirement savings. Members of Generation X fare a little better than boomers—55% of them have less than $100,000 saved. Another concern for those with retirement accounts is that a financial emergency will cause them to dip into those funds before retirement, leaving less to live on in their later years.
Millennial employees as a whole have another financial worry that many of their older coworkers don’t have to deal with—student loan debt. It’s estimated, according to Forbes, that as of Q2 of the 2019 fiscal year, about 15.1 million millennial borrowers had a cumulative $497.6 billion in outstanding student loan debt, or about $33,000 per borrower.
These concerns about money can weigh heavily on an employee’s mind. Fifty-eight percent of the employees in the PwC survey say they are stressed about finances, and 50% say that financial stress has been a distraction at work.
The COVID-19 pandemic has only heightened workers' financial worries. Yahoo reports that a survey done by Edelman Financial Engines about a month into the health crisis in the U.S. found that job stability is now an increasing worry as workers become laid off, furloughed or face reduced hours. Almost 85% of workers said they were concerned about losing the income from their job and 46% said they were concerned about their spouse’s job.
Workplace initiatives for managing financial stress
Many companies have initiatives in place for managing the physical and mental wellness of their employees. Since financial stress can create both physical and mental illness in workers, employers should add initiatives that assist their team’s financial wellness, too.
- Know the needs. Younger workers, millennials and Generation Z, are more comfortable with getting financial guidance and education on managing salary, retirement and insurance coverage from their employers. Workers in the older generations are looking for specific financial wellness programs to be put in place as they head toward retirement.
- Offer a financial wellness program. Financial guru Dave Ramsey says behavior modification is the key to getting rid of financial stress for employees. “Personal finance,” he says, “is 80% behavior and only 20% head knowledge.” Offering a comprehensive financial wellness program as a benefit instead of the one-off investment seminar for employees may help employees effectively change financial behaviors which could possibly lead employees to experience higher morale and loyalty and less turnover.
- Set up savings programs. Employers can set up an emergency savings account (ESA) that allows an employee to automatically deposit money through payroll deduction, according to the Society for Human Resource Management (SHRM). The money is taxed as income and can be withdrawn at any time when there is an immediate financial need. In addition to being a “rainy day fund,” an ESA can ease an employee’s worry that in the event of a financial emergency, they would need to dip into their retirement account. The COVID-19 pandemic has heightened the interest in ESAs.
- Pay off student debt. Companies can offer an education debt benefit—taxable contributions to help employees repay student loans.
- Add financial wellness to the company’s EAP. An employee assistance program, commonly referred to as an EAP, offers free and confidential assessments for employee problems as well as offering counseling, referrals and follow-up services. EAPs are often thought of as ways to improve physical and mental health of those in the workplace, but adding financial counseling to a workplace’s EAP can help to ease financial stress on workers.
At Spring Health, we can supplement or replace your company’s traditional EAP with the most comprehensive, effective solution for employee well-being, one that incorporates financial wellness into the program. Contact us to request a demo today.