Employee Financial Stress
If you have employees, you can pretty much guarantee that they are stressed about finances.
According to a new Student Loan Hero survey1 released in February:
- 45 percent of U.S. adults feel depressed about their finances with income, lack of savings, and no discretionary money as the top three issues
- Overall, 37 percent believe their finances affect their mental health. When broken down by age groups, this includes 49 percent of millennials, 36 percent of Gen Xers, and 28 percent of Baby Boomers.
- Those with student loans are two times as likely to feel depressed, but 48 percent of those with loans feel they cannot afford to see a mental health counselor.
This survey is not the first to suggest that U.S. employees are struggling with financial stress. The Financial Health Network’s recent survey shows similar results, with 68 percent of workers making $60,000 or less saying they are very stressed about finances.2 A 2019 Zillow report found that nearly a quarter of those surveyed could not easily make their rent or mortgage payment.3
These Americans work in your company, and their stress affects your bottom line.
Financial Stress Affects Your Business
Employees stressed about finances bring that stress to the job, costing U.S. businesses about $500 billion each year.4 That means the average business loses about $2,800 per employee per year just due to financially stressed employees.
To help businesses understand how they are losing this money, the 2019 Employer’s Guide to Financial Wellness by Salary Finance,4 discovered the activities impacted by financially stressed employees, including:
- 38 percent - Daily tasks go unfinished
- 34 percent - Work quality diminishes
- 14 percent - Seek other employment
Additionally, stressed employees often miss work. One study shows that 550 million days are lost to stress each year.5
Older employees who can’t afford to retire cost businesses significant money too. A Prudential study found that delayed retirement costs companies 1.2 percent more each year per employee, and 3 percent more each year if that delay goes beyond three years.6 The cost is attributed to an increased need for sick leave and personal days, as well as an increase in benefits such as life insurance, disability insurance, vacations and health insurance premiums.
Helping Employees Become Financially Sound
How can an employer help their employees reduce financial stress and become financially sound? The answer lies in understanding what money problems make your employees most anxious and then providing them with a way to become more financially well.
According to the Planning and Progress Study, employees are most stressed about healthcare, lack of savings, debt (including student loans) and retirement planning.7
The good news is that three out of four employees want help from their employer.2
But not all financial wellness programs are created equal. Some merely focus on retirement planning and others have a one-size-fits-all solution. Such programs, though a good start, do not address the financial needs of employees and won’t be effective.
A holistic financial wellness program should be personalized and adaptable to individual employees, offering education and tools in specific areas where they struggle.The most effective programs use gamification, live financial help and interactive tools.
With this type of financial wellness program, employees can:
- Learn about financial strategies to pay off debt and create personal and family budgets
- Speak with a professional about unique situations and issues that are causing them financial stress
- Discover student loan debt relief options such as income-driven repayment, deferment, forbearance, and refinancing
- Understand employer-sponsored retirement plans and the benefit of starting early
- Begin saving for emergencies
Offering a holistic financial wellness program is a great investment in your employees and your company. As your employee’s financial wellness increases, the negative effects of financial stress will decrease. Your employees will be happier and more loyal to your company. And your bottom line will thank you.