Most of us have experienced financial stress at some point during our lives. Sleepless nights thinking about how to get through the next month. The sense of dread when seeing an unpaid bill arrive. Tense moments with our spouses when discussing the family’s finances.

Today, financial worry is a major stressor for American workers, and rising inflation isn’t helping. In fact, the recent Stress In America survey involving over 3,000 adults revealed that nearly 90% of respondents cited the increase in costs for everyday items as a significant source of stress.

When asked what they feel causes them the most stress, workers cite financial matters more than any other life stressors combined.

The pandemic only worsened the situation. About half of working adults in the U.S. said the impact of COVID-19 will make it more difficult for them to achieve their long-term financial goals. Of those who said their financial situation has worsened, 44% said it will take three years or more to get back to where they were pre-pandemic, and 1 in 10 said their finances will never be the same.

The 2022 Personal Capital Wealth and Wellness Index indicates that only 53% of Americans are in a position to handle an unforeseen $500 expense without worry.

Forward-looking employers understand that it’s in their best interests to do what they can to help their employees move towards financial wellness. They recognize that good personal financial habits amongst employees are as important as healthy eating and exercise.

In this article, Payactiv explores the concept of financial wellness from all angles.

What Does Financial Wellness Mean?

Before we consider what employers can do to help workers who are experiencing financial stress and why it matters, let’s pause to consider what the term “financial wellness” really means. It’s a vague term that is a catch-all for just about anything with a dollar sign involved.

The term “financial wellness” appeared a few years ago and has been winning increased acceptance among employers.

The Employee Benefit Research Institute conducted a survey about a year ago in which employers could not even agree on exactly what the term meant.

• 34% defined it as “having access to assistance and resources that enable good financial decisions.” This definition is even more vague than the term itself!
• 30% defined it as “being comfortable/financially secure overall.” This is somewhat helpful because it speaks directly to individual workers and how they feel. We all have different ideas of what “comfort” and “security” may mean to us, but at least these are concepts that enjoy common denominators.
• 21% defined it as “being equipped to achieve retirement security through planning and saving.” This is highly specific and helpful. However, it speaks to the future as opposed to focusing on the present and how workers live now.

There’s another problem regarding “financial wellness”; only 23% of employers, according to the same survey, utilize financial wellbeing metrics with their workforce. Payactiv believes that this low percentage is due to the very fact that “financial wellness” is not clearly defined. How can you measure what you can’t clearly define?

On the employee side, there is also a wide disparity in regard to a definition.  PwC’s 2019 Employee Wellness Survey asked employees about the definition of financial wellness.

Here’s how the answers stacked up:

• 34%: Not being stressed about my finances
• 18%: Being debt free
• 16%: Having enough savings that I’m not worried about unexpected expenses
• 16%: Financial security to make choices to enjoy life
• 12%: Being able to meet my day-to-day and monthly expenses
• 4%:  Being able to retire when I want to

Notice that employee definitions are not only widely varied but are highly specific and address the here-and-now.

This highlights yet another problem with “financial wellness” in that there appears to be a disconnect between how employers and employees think about the term and what it means.

Responsible employers are striving to bridge this divide, and there are compelling reasons for them to do so. Next, let’s look at the benefits for employers of fostering a culture of financial wellness in their workplace.

Benefits of Financial Health at Work

When people are stressed about money, it can have a significant negative impact on their physical and mental well-being.

Being stressed about money has a direct impact on people’s physical health, negatively impacting everything from their sleep quality to their immunity levels.

Financial stress can also have a direct impact on mental health. People in debt have higher rates of mental health issues such as depression and anxiety compared with those who are debt-free. Poor financial health can also exacerbate existing mental health problems: 86% of people with mental health problems say their financial situation has made their mental health problems worse.

When people are struggling with their physical and mental health – or both – their job performance will be one of the first things to suffer.

Studies show that a lack of financial health leads to a decline in decision-making abilities. In other words, the more stressed your employees are, the less likely they are to make smart decisions at work.

Employees who are worried about their finances sometimes feel resentful if they believe they’re not being paid enough or not getting financial benefits commensurate with their effort and achievements. Oftentimes, people will leave their jobs in the hopes of earning more money elsewhere.

Unfortunately, many Americans have never been taught how to handle money. In fact, the average American correctly answered only 52% of the questions on the TIAA Institute-GFLEC Personal Finance Index in 2021.

Recognizing the need for more financial literacy within their employee base, increasing numbers of employers are stepping in to support by offering financial literacy and education programs.

How Can Employers Improve Workers’ Financial Wellness and Move them Towards Financial Security?

Just like physical and mental wellness, financial wellness requires both prevention and treatment.

However, the truth is that many people are uncomfortable discussing money worries with others, and 68% would not want to discuss finances with their employer for fear of shame, embarrassment, or even discrimination. So, you need to ensure that you approach the subject delicately. Here are some ways to do so:

Offering employees independent access to financial wellness programs that include coaching and educational tools is one approach that’s gaining in popularity. You could introduce them to free online savings and budgeting apps. You could provide finance webinars and seminars or hire a personal financial advisor to visit your workplace and be available for staff to pop in for confidential advice. Not only will these interventions help people feel more in control of their finances, but they’ll also foster a great deal of goodwill towards you as a company for providing preventative and educational measures to help them.

In parallel with efforts to assist employees in improving their overall financial wellness and getting out of debt, employers should ensure they have the correct mechanisms to help anxious or stressed people cope. Employee assistance programs (EAPs) are one way to achieve this.

Also, don’t underestimate the power of basic moral support. Look for opportunities to bring people together and boost team morale. Proactively create moments of celebration at work as a means to remind employees that they have a strong team structure in place to help them through challenging times.

The bottom line is that workers will be happier and more productive if they’re not worrying about money issues. Giving struggling employees a pay rise isn’t always feasible, but there are other ways you can help to improve their financial and overall well-being.

Collectively, these interventions will have a positive ripple effect in driving increased worker productivity, more job satisfaction and engagement, and improved mental and physical health.

How Does Payactiv Improve Employees’ Financial Wellbeing?

Payactiv’s all-in-one Livelihood Platform and financial wellness programs take a holistic approach to ensuring employee financial wellness. Our services help you to help your people address their immediate financial needs, but we also make it possible for employees to take positive steps toward long-term financial stability and growth.

In addition to offering on-demand access to earned wages, we coordinate cashless payouts of tips and mileage, off-cycle pay, savings and budgeting tools, a discount marketplace, and a communication platform for deskless employees.

We also facilitate fast, flexible shift coordination. You can give your employees easy access to your corporate shift scheduling system via their smartphones. They’ll get alerts when new or additional shift openings appear, which they can pick up – with just a click on the Payactiv smartphone app.

Learn more about Payactiv’s Service, or book your demo now.