Financial wellbeing rarely receives the same attention as mental or physical wellbeing, yet it is a vital part of any wellbeing programme. Money is a concern for plenty of people, and many employees will struggle with their finances due to issues such as personal debt, demanding financial commitments or the limited time and ability to save for the future.
Research has linked financial concerns to negative effects on employee mental and physical wellbeing, which in turn could seriously affect productivity at work and consequently the health of a business. In the final installment of our three blogs looking at the key aspects of wellbeing, we focus on the financial side of the issue.
What is financial wellbeing?
Financial security should not be confused with wealth or net worth: it is about a person’s ability to exert control over their finances. Control of personal finance can be defined as an ability to respond to financial unpredictability, or unexpected financial expense, as well as the ability to meet financial goals and make choices that allow an enjoyable life.
However, many employees struggle to make ends meet, something that might be exacerbated by the cost of living. They may also be concerned about their job security, a factor that could be magnified by worries about the state of the wider economy.
Even workers receiving good wages may suffer from low financial wellbeing if they have made badly-informed decisions, or feel they are not being as generously rewarded as they deserve, particularly in comparison to colleagues.
The cost of neglecting financial wellbeing
Financial wellbeing not only affects individual workers, it also negatively impacts on the performances of businesses, as well as the wider economy. Financial stress costs the UK economy £121 billion and 18 million working hours in time off work each year, according to a report published by employee benefits firm Neyber. The report also showed that 33% of employees consider financial worries to be their biggest concern, while risk management company Willis Towers Watson indicated that 34% of employees reported that financial concerns impacted negatively on their productivity.
A report from the Chartered Institute of Personnel and Development (CIPD) showed that one in four workers report that money worries have affected their ability to do their job. The CIPD also reported that 19% of employees lost sleep worrying about their finances, causing disruption to sleep patterns, fatigue and contributing to lower productivity levels.
It is essential that employers take financial wellbeing as seriously as mental and physical wellbeing for a holistic approach to supporting their workforces. By identifying those who are vulnerable and offering support, an employer can help reduce stress and prevent absenteeism in the workplace.
Support and education
Employers have a role in educating employees in financial literacy and signposting the appropriate sources of professional support that are available.
An Employee Assistance Programme (EAP) is a significant employee benefit and can assist those at risk of falling into debt or struggling with their finances. Businesses should integrate financial wellbeing into organisational health and wellbeing policies and be explicit about what’s available within the organisation to people with financial issues: for example, pay advances, hardship loans, time off to sort financial issues, travel loans, access to an EAP, money counselling or other support services.
It is important that employees know what the business can offer them in the way of benefits, whether it is help with savings, access to finance, or help managing debts before they spiral out of control. Education is vital to financial wellbeing and there are a number of organisations offering free guidance on money issues.
There are various incentives for employers to provide an EAP for their workforce, including a boost to the bottom line. An EAP can help reduce sick leave, boost performance and productivity and improve staff health and wellbeing, all of which can benefit productivity and profitability.
The three main areas of wellbeing (mental, physical and financial) are interlinked and interdependent in a whole host of respects. Employers who invest time and resources into wellbeing programmes in these three areas will be making a vital contribution to the health of their workforces, as well as the business itself.