Life is full of questions at every turn. When we don’t know the right question to ask, or who to ask, or where to go for help, it creates stress that may manifest in multiple negativities.
Financial health falls in this category. While there is evidence that poor personal financial health can impact one’s physical, emotional, and mental well-being, it is also known that most individuals do not know where to turn to assess their own financial well-being or to improve their situation. Most individuals are also hesitant to share financial difficulties with others and cannot ascertain the value of such discussions due to lack of knowledge in the area.
Almost 60 percent of employees, including 47 percent of those earning more than $100,000 per year reported that personal finances are the top cause of stress in their lives (2023 PwC’s Financial Wellness Survey).
This stress may lead to sleeplessness, lack of concentration, anxiety, depression, and other mental health issues. Individuals with personal financial health issues are also more likely to experience physical issues like high blood pressure, heart disease and obesity, and social wellness issues such as lack of self-esteem, personal relationships and/or engagement with their colleagues. As such, it becomes imperative that employers recognize the value of investing in employee financial education programs and connecting their employees with resources including those that are free or low cost.
Supporting your employees’ financial well-being not only improves employee engagement, but also enhances the workplace environment and organizational productivity. When employees face financial stress, they are less likely to focus on their career or put in extra effort to advance their career, thereby getting stuck in the vicious cycle of financial health issues.
Many who are in this situation do not have access to such resources on their own and may exhibit increased absenteeism, distraction, and workplace stress.
When employees are exposed to financial literacy, their financial stress reduces, and they start making better financial decisions that positively impact them and their families. They learn to manage their debt, pay attention to their debt income ratio, evaluate their insurance coverage, and plan better for major life events including home ownership, retirement, and education expenses. Reduced stress also leads to increased engagement, improved morale, and greater satisfaction at work all of which results in lower employee turnover. Investment in financial education demonstrates a commitment to holistic development of their employees, and employees exhibit higher commitment and employers see a lower employee turnover rate.
The need for such education has become more critical and acute since COVID. Many relief programs put in place during that time have evolved, and student debt repayments are set to begin in October 2023 after the Supreme Court ruled that the HEROES act does not authorize the administration’s loan forgiveness plan.
Employees will need help in understanding the impact of these changes on their finances and how to use the programs in existence if they are eligible.
Some of the ways in which employers can provide financial education to their employees include:
- Provide in-house seminars conducted by financial experts especially those who don’t have a vested interest to sell financial products.
- One on One Financial counseling and Group Financial Wellness programs
- Provide time and vouchers to take a personal finance course online or at a local college or university.
By empowering the workforce with the tools and knowledge needed to navigate their financial challenges, employers can create a healthier, more engaged, and productive workplace.
Dr. Raminder Luther is the Dean of the Bertolon School of Business at Salem State University and a member of the Chamber’s Thrive Advisory Committee.