Financial insecurity is an unsettling reality for many workers in today’s fluctuating economic landscape. As inflation remains high, financial stress among employees continues to rise. Recent research found that half of all employees report moderate to high levels of financial worry, and many are leaning on retirement accounts as their primary emergency fund.

The associated stress impacts employees’ mental and physical well-being and is exacerbated by their lack of financial knowledge, high debt levels, and low emergency savings.

How can employers help? That’s a question we’ll provide some answers to in this blog.

How Financial Stress Impacts Workplace Productivity

Financial worries contribute significantly to people’s stress levels, and the effects can seep into every corner of life, including work. The burden of financial insecurity manifests in various harmful ways, impacting employees’ ability to function effectively in their roles.

Cognitive Performance

Stress hormones like cortisol can impair people’s cognitive performance and reduce their ability to concentrate, memorize, and learn. In the workplace, this translates to reduced attention to detail and a greater likelihood of making errors.

Physical Health

Financial stress has been linked to severe physical health problems like heart disease, high blood pressure, and a weakened immune system. In addition, workers distracted by financial pressures are more prone to job site accidents and injuries.

Absenteeism

Money worries can lead to increased absenteeism. According to a recent PwC survey, 57% of employees who are stressed about money have missed work due to these concerns.

Engagement and Morale

When workers are worrying about how to make ends meet, they may feel less connected to their company’s goals and less motivated to invest extra effort. Financial stress can also erode morale and increase burnout rates.

How Financial Wellness Benefits Your Company

Higher Employee Engagement, Lower Turnover

People who aren’t preoccupied with their finances are more likely to be fully present and engaged during working hours. They’re also less likely to leave their jobs, which reduces recruitment costs and sustains team cohesion and continuity.

Cognitive Benefits

Financial stability and security can enhance workers’ cognitive function by reducing distractions. Employees can direct the mental energy that would otherwise be spent worrying about paying bills toward productive and creative job-related tasks.

Strategies for Addressing Financial Stress in the Workplace

While the impact of financial stress in the work environment is significant, there are proactive steps you can take to support your workers and mitigate these challenges. Here are some initiatives to consider:

Financial Education and Wellness Programs

Financial education and wellness programs are designed to empower employees with the knowledge and tools they need to manage their finances more effectively. Topics can include budgeting, savings strategies, debt management, and retirement planning.

Flexible Pay Options

Flexible pay options, such as Earned Wage Access¹ (also known as on-demand pay), can help employees better manage their cash flow and reduce financial stress. Earned Wage Access allows employees to access a portion of their earned wages before payday, helping them handle unexpected expenses without resorting to high-interest loans or credit card debt.

Steps to Success

But how do you go about such programs in your workplace? Here are some key steps:

Assess Your Employee’s Financial Needs

The first step is to understand your employees’ unique financial needs and challenges. This can be done through anonymous surveys, focus groups, or confidential one-on-one conversations. Some key questions to ask include:

• What are your biggest financial concerns and stressors?
• How confident do you feel in your ability to manage your household finances?
• What types of financial education and resources would you find most helpful?

Once you understand your workers’ needs more clearly, you can start evaluating different financial wellness tools and platforms. Seek out tools that offer a range of features and resources, from financial education to personalized coaching. It’s also essential to select solutions that integrate seamlessly with your existing benefits offerings and include robust security measures to protect your workers’ sensitive personal and financial data.

Other key financial tools and features to look for include:

• Personalized insights and recommendations based on employees’ unique financial situations.
• Goal setting and tracking capabilities.
• A user-friendly interface and easy navigation.

Spread the Word

To ensure the success and widespread adoption of your financial wellness program, it’s essential to promote employee engagement and participation. This can be done by:

• Offering incentives for employee participation, such as gift cards or additional vacation days.
• Hosting informal lunch-and-learn sessions on financial topics.
• Distributing regular communications and reminders about available resources and tools.
• Encouraging supervisors and managers to have open conversations about money with their teams.

By taking a proactive and holistic approach to financial wellness, you’ll be on track to create a culture of financial empowerment and success among your employees.

Banishing Stress with Financial Tools: The Takeaway

By integrating realistic and relevant financial tools, benefits, and perks into your benefits package, you can create a supportive environment that addresses your employees’ most pressing financial concerns.

Payactiv is here to help. In addition to Earned Wage Access, our business solution includes free saving² and budgeting tools, financial coaching, Payactiv Visa® payroll cards*, off-cycle payments, cashless tip disbursements, and a deskless employee communication platform, including shift coordination. These services are offered through the Payactiv mobile app³, a handy all-in-one digital wallet.

Explore our solution to employee financial stress today!

¹Earned Wage Access requires employer participation. Employees can only access a portion of the wages they have earned to date.

²Goal-based saving is a set-aside account, and you will not receive interest or other earnings on the funds within the goal-based account.

³Standard data rates from your wireless service provider may apply.

* The Payactiv Visa® Payroll Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at Payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll-free at 877-747-5862, 24 hours a day, 7 days a week.

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