5 steps to avoid financial stress in your company.

In the United States alone, half a trillion dollars a year is lost in productivity due to employees’ financial problems. Therefore, more and more companies are investing in financial education and guidance for their employees as an essential part of their wellness programs.

If you want to combat employee financial stress and ensure more engaged and productive teams , this article can help.

Why worry about employees’ financial stress?

Financial stress among employees is a growing concern for companies worldwide, considered a major cause of low productivity and demotivation.

Often, worries about debt, overdue bills, and difficulty saving and investing for the future distract professionals and impair their work performance .

Therefore, in addition to salary and benefits, organizations have been mobilizing to offer financial education programs, investment consulting, retirement plans, and other initiatives that help employees manage their financial health.

In this way, they can increase engagement and combat problems such as absenteeism, high turnover rates, and low performance. If you’ve never considered how much employee financial stress affects company results, you’ll be surprised by the following figures.

Employee financial stress in numbers.

The best way to understand the impact of financial stress on employees is to analyze research, data, and statistics . See what the numbers say about this issue.

The main financial concerns of employees

According to the 2019 edition of PwC’s annual Employee Financial Wellness Survey, 59% of respondents cited money-related issues as their main source of stress at work.

Next come the challenges of the job itself (15%), relationships with managers and colleagues (12%), and health issues (10%). These are the financial concerns that most keep professionals awake at night:

• Not having an emergency fund for unexpected expenses.
• Not being able to retire when you want to
• Not being able to pay the monthly bills
• Not being able to pay the debts
• Being fired from your job
• Losing your property
• Not being able to pay for the children’s school fees .

Lack of perspective for the future and present impacts.

Another striking finding from the PwC study is that 80% of employees believe they will still be working after retirement due to financial necessity. At the same time, only 43% have calculated the income needed for retirement, and this lack of perspective for the future is one of the main causes of financial stress.

Regarding the impacts, 32% say that worrying about money affects their health, 32% say it disrupts relationships at home, and 21% feel the negative effects on their productivity at work.

The negative impact of financial stress on companies.

Another study, conducted by Salary Finance in 2019, reveals that half of the American workforce is currently facing financial stress.

But what’s most striking is that this phenomenon is causing companies losses of over US$500 billion due to decreased productivity. Furthermore, financially stressed employees are more than twice as likely to seek other employment, leading to increased turnover rates .

The consequences for employees and the company’s role.

According to research by Salary Finance, in general, a professional concerned about their financial health has:

• 3.4 times more likely to experience a panic or anxiety attack.
• 4 times more likely to suffer from depression
• 5.8 times more likely to miss deadlines at work.
• 4.9 times more likely to exhibit low performance and productivity.

Another important fact is that financial stress doesn’t only affect lower-paid professionals, as the 40% who earn over US$100,000 annually are equally affected by the problem. According to Asesh Sarkar, CEO of Salary Finance, companies can no longer ignore the financial situation of their employees.

“Historically, employers have always felt that their employees’ finances were none of their business, but companies can no longer ignore the financial well-being of their employees. There is a clear connection between mental and financial well-being.”

What is the role of companies in combating financial stress?

It became clear that companies need to engage in combating employee financial stress if they want to guarantee their productivity rates, talent retention, and high performance.

The solution to this is to develop financial wellness programs that offer solutions in financial education, investment guidance, retirement plans, and other benefits that help professionals get organized and save for the future.

However, according to PwC research, financial stress has been growing precisely because these programs are not effective in key areas such as:

• Preparing employees for retirement
• Assist in controlling expenses.
• To guide debt repayment.
• To educate oneself about finances in order to achieve goals (buying property, postgraduate studies, travel).
• To provide guidance on managing fixed and variable income investments and asset allocation.
• To assist in managing healthcare expenses.

Therefore, the way forward is to create a more comprehensive program that supports employees in their financial decisions and helps them balance their budget—and not just provide basic financial education.

5 steps to ensure the financial well-being of your employees

Now that you understand the impact of employee financial stress on the business, you need a strategy to address this problem. Follow these steps to create your own financial wellness program .

1. Identify employee needs.

The first step in creating your financial wellness program is to discover the priorities and challenges faced by your employees. To do this, you can conduct an internal survey and consider the following points:

• Debt level
• Controlling the household budget
• Asset situation
• Retirement plan
• Tax planning
• Knowledge in investments
• Relationship with credit .

Based on this information, you can create a profile of your employees and understand the main challenges they face in their financial lives.

2. Analyze the company’s role in employee finances.

The next step is to identify the role the company plays in employee finances. To do this, it’s necessary to evaluate aspects such as:

• Salary compatibility with the market
• Relevance of the benefits package (transportation voucher, meal voucher, food voucher, etc.)
• Medical and dental care offered
• Additional benefits such as education assistance, childcare assistance, and insurance.
• Variable compensation policies (e.g., performance bonuses, profit sharing).

3. Define the most important benefits.

With the financial profiles of your employees and a broad view of the company’s role in their personal finances, you can now define which benefits and actions are most important . Here are some ideas for structuring your program:

• Create new performance-based compensation policies.
• Offering personalized financial and tax consulting.
• To provide training and workshops on financial education to guide individuals on budget control , credit use, debt repayment, private retirement plans, expense reduction, savings, and investments.
• Facilitate access to loans with lower interest rates.
• To offer specific consulting services for short, medium, and long-term investments to achieve financial goals and build wealth.

4. Engage employees in the program.

After creating a tailored program to combat employee financial stress, you still need to ensure buy-in and engagement . To do this, start with creative and motivating communication about the program across all internal channels, demonstrating the company’s concern for everyone’s well-being.

You can also set financial goals for savings and cost reduction to motivate employees, for example.

Another effective way to engage employees is to use digital solutions , such as apps that offer financial check-ups, budget control, and personalized recommendations.

5. Monitor the program’s performance.

Finally, it’s important to monitor the program’s performance using indicators such as participation rates and employee progress toward each goal. This allows you to adjust actions to meet employee needs and continuously improve results, drastically reducing financial stress on your company.