Money makes the world go round…
But the lack of it causes a series of problems that make people feel worried and forced to put their lives to a halt.
Numbers perfectly demonstrate this. According to a TalentLMS, Enrich, and Tapcheck study on financial awareness training:
- Only 5% of employees say they have met their financial goals. Out of those who didn’t meet their goals, inflation (62%) and insufficient income (48%) are the two main obstacles to reaching them.
- Recession talks have made 7 in 10 employees more concerned about their financial wellness.
- 66% of Millennials, 59% of Gen Z, and 47% of Gen X employees have experienced mental health struggles due to money-related issues.
Thus, we can’t ignore these money worries in the workplace. Your people’s mental health is in danger, affecting their overall wellbeing but also their productivity and performance at work.
In this article, we’ll discuss what makes your people frustrated, how mental health due to financial stress affects their productivity, and, finally, how to overcome this situation with the right financial wellness strategy.
What keeps people up at night
Being in a situation of financial difficulty or worrying about finding yourself in this position has detrimental effects on your mental health.
In fact, financial difficulties are the most common cause of stress in our times, and the stigma around debt means that people don’t ask for help. They become isolated and end up with severe mental health issues.
Which are the most common reasons why people face mental health issues due to financial stress? In brief, the most usual pain points are:
- Rising cost of living
- Low or lack of income
- Job loss
- Unexpected expenses
- Need for financial independence
- Lack of savings
Overall, everything is becoming more and more expensive. Thus, it’s hard for people to keep up with this change. Even thinking about your income vs the cost of living (especially in the big cities), you get stressed. You start worrying about not having enough to cover costs.
At the same time, it’s interesting to examine how childhood core beliefs can affect someone’s approach to dealing with money. For example, if you’ve witnessed your parents struggling with expenses, you’re most likely to develop a fear of going into debt.
Also, a potential job loss can trigger feelings of financial insecurity. A lot of organizations tend to lay employees off due to fear of an upcoming recession. As a result, people start feeling afraid they will lose their job. And this thought alone, brings more questions to employees “How will I find a new job with businesses not hiring staff?”, “How will I ask for the compensation package that covers my financial needs in such hard times?”.
Thinking about these daily can challenge people’s mental stability.
How financial stress affects people’s productivity and overall engagement at work
“Employees report workplace disenchantment, reduced productivity, and extending employment due to financial anxiety.” According to a study by ADP, people’s productivity becomes affected by financial stress. Let’s see in detail how this occurs.
Some of the employees are considering doing several jobs to increase their income. But this might affect their commitment to your company. Others might start actively looking for a higher-paying job, which results in lower retention rates for your organization.
Besides that, employees have started cutting costs when it comes to entertainment. They sacrifice going out, shopping, and spending on streaming services and music. As a result, people now have fewer opportunities to relax, decompress, and keep up with their work-life balance. Not receiving enough entertainment might lead to isolation and feelings of depression which then affect how people perform at work.
At the same time, we should not forget that people’s physical health gets affected. More and more people decide to sacrifice their workout sessions as a means of cutting down costs. Staying active, however, helps cope with stress levels, and feel stronger, healthier, and more productive. People who skip workouts get sick on a regular basis and miss work, which translates into decreased productivity among your teams.
What’s interesting is that younger generations are affected the most, with Millennials being the most stressed-out generation when it comes to finances. This indicates that money-related and mental health worries will keep impacting companies in the years to come.
How can companies help employees?
Given the pressure a potential recession is putting on companies, it’s hard to increase employees’ compensations and help ease financial stress. Still, employers can help their people.
1. Offer the right types of training
Helping your employees build confidence concerning their financial situation is key to alleviating financial stress. By offering well-planned financial awareness training, you can share knowledge, tools, and resources with your employees and show them how to handle their money worries.
“Over two-thirds of employees said that they felt safer and more secure thanks to financial wellness training they got at work,” according to TalentLMS’ study on financial wellness. Through this training, they will have the chance to discover how mental health is connected to money worries, as well as ways to deal with their financial obligations, save money, cut down costs, and invest in a retirement plan that suits them best.
Also, investing in well-being training is another great solution. Besides sharing knowledge on how to deal with financial problems, it can also come in handy to support your employees in a broader way. Well-being training is crucial for discovering how to live a healthy, balanced life, and as a result, stay productive at work. Employees can follow tips and other advice so as to reach their fullest potential both on a personal and professional level.
2. Provide financial advice
Apart from financial awareness training, mentoring and coaching (whether online or in person) is another way of supporting and empowering your employees who struggle with managing their finances. Having experts in the field of financial management to assist your teams can bring benefits to your business.
For example, when your employees receive know-how on planning their finances and know they can turn to someone with expertise for assistance will not feel overwhelmed, stressed, and unproductive.
3. Create programs for retirement and investment
A robust retirement or investment plan within your company is one of the best ways to assist your employees in planning their long-term financial security. By following a step-by-step guide, they get to set their own financial goals, create a personalized budget, plan their taxes, and more.
4. Give meal allowance
Spending money on restaurants and bars is something most people have reduced or stopped doing to lower their expenses. But, as discussed before, going out and socializing with peers, family, and friends helps deal with everyday stress.
Your organization could plan to offer meal allowance to employees to motivate them to spend more time outdoors (or indoors without having to struggle with the bare minimum), and as a result, cope with stress.
5. Invest in a flexible work model
Commuting is also a big expense for employees. With the rise of technology, remote and hybrid work models right on your hands, it’s a pity not to start implementing them into your organization. Employees choose their type of work, feel less stressed with commuting and spending time and money on it, and are finally able to be fully focused on their job, productive, and engaged from the comfort of their own homes while saving money at the same time.
Staying on the right lane
Work-life balance doesn’t mean keeping those two “worlds” completely independent from each other. But it means prioritizing needs and finding a sustainable way to take care of both your professional and personal life.
Employers who want to help their people find the right work-life balance might need to think about benefits that aren’t strictly related to their job tasks (such as financial wellness benefits.) Happy employees mean high productivity and performance. In such times, it’s more than necessary to start investing in how your employees feel to benefit from all they have to offer to your organization.