Financial wellness is defined as having financial security and financial freedom of choice in both the present and the future. The more proactively prepared individual can handle life’s financial circumstances, they are more balanced in their responses to potential stressors such as being retirement ready or handling life’s emergencies that may come up that require dipping into the savings account.
The 2016 Employee Financial Wellness Survey conducted by PwC shows 40% of all employees surveyed find it difficult to meet their monthly household expenses.
What, exactly, are they concerned about? Included in the list:
(1) not having enough emergency savings;
(2) not being able to retire;
(3) not meeting monthly expenses;
(4) being laid off; and
(5) increased debt.
Even knowing these financial concerns, though, employers do not always know how to alleviate the personal impact they may have on an employee’s life. These financial concerns are brought into the workplace, causing general distractions and stress which contributes to increased blood pressure and depression. In turn, these conditions can cause absenteeism, wage garnishments, disability/workers compensation claims, or substance abuse and even theft. For the employee, this cycle worsens over time and all the symptoms harden making it more difficult for the employee to work themselves out of the cycle. For the employer, this can impact the business’ profitability, decrease employee productivity, and increase health insurance rates, overtime, and employee turnover.
Creating a financial wellness plan starts with having the right company philosophy. An employer would be wise to understand the correlation between financial concerns and impacts on business – and from there, understand how to help alleviate the impact on employees.
But why should an employer become that involved with understanding the financial concerns of their employees? Consider this: it is known that when an employee has money problems they can endure on-going stress which impacts their health and in turn, the workplace. On the low end, employees might have to fight to overcome the mental distractions and on the higher end, they might face serious health issues, such as increased blood pressure or depression. Employees might experience high rates of absenteeism, see their wages garnished, file disability claims, endure workers’ compensation injuries, become dependent on drugs, or even resort to theft. This impacts the profitability of the employer; productivity decreases, health insurance rates skyrocket further, overtime increases to cover operational gaps and employee turnover increases. Employees who are not distracted and worried about financial problems are less stressed, healthier and can focus more on work. This leads to fewer health insurance claims, less downtime, absenteeism, and turnover – this fosters a happier, healthier, and more productive workforce.