The significance of financial wellness in the workplace is understated at most times. The truth of the matter is that financial wellness has a substantial impact on an individual’s and the company’s success. When employees are stressed about their finances, it not only impacts their productivity and efficiency but also the overall performance of the business.
Therefore, it is critical for employers to maintain the financial wellness of their employees in the workplace, to promote the growth of their business, and to create a positive working environment.
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Reasons Why Financial Wellness is Significant in the Workplace
- Leads to Underperformance of Employees: The absence of financial wellness keeps the employees stressed and less engaged at work. It further impacts their productivity in terms of the number of work hours lost and absenteeism. Employees tend to spend more time dealing with their finances at work and take more leave due to stress-related illnesses. This is substantiated by statistics that show that there is a huge gap between the productivity of employees who are financially well and those who are not.
- Impact on Employers and Businesses: The financial wellness of employees in the workplace is directly related to the growth and performance of businesses. Financially secure employees perform better, generate more revenue for the business, and create a holistic and healthy working environment. On the other hand, the lack of financial wellness in the workplace leads to reduced productivity that impacts the businesses’ bottom line, work atmosphere, and the future employability of the company. Furthermore, the company will need to spend less on hiring new employees and training them due to reduced turnover and higher retention and engagement.
Data and Statistics Around Financial Wellness in the Workplace
The AMP Financial Wellness Report for 2019 revealed astonishing data about financial wellness in the Australian workplace. The report gathered data from over 2,000 Australian employees through online interviews and concluded that:
- Two in five Australians will experience financial stress in their working lives, lasting for an average of 6.4 years.
- Lack of financial wellness causes a loss of AUD 31.1 billion in revenues per year.
- 5% of the Australian employees are severely financially stressed, 14% moderately financially stressed, 35% mildly financially stressed, and 46% are financially secure.
- Financially stressed employees spend 3.2 days per year more than the financially secure employees in dealing with finances at work and take 2.4 sick days more per year.
- Demographically, the incidence of financial stress is more in females, single parents, people in regional QLD, and those flatting with others.
- The level of financial wellness is also impacted by workplace conditions. For instance, contract workers, hot-desking employees, and job share workers are more financially stressed than other employees.
Thus, the alarming data provided by the AMP Financial Wellness Report further reinforces the significance of financial wellness in the workplace, factors causing financial stress, and their impact on the overall growth of employees and organisations.
How to Promote Financial Wellness in the Workplace
The data and statistics have made it astonishingly clear that financial wellness in the workplace is highly critical. Additionally, we also know that the Australian workplace has a lot of scope of improvement in terms of financial wellness.
So, the next step is to work towards the solution of the debilitating problem that is costing both the employees and employers, financially, psychologically, and physically. You, as an employee and an employer, can take the following measures to improve the financial wellness in the workplace.
1. Understanding the Financial Wellness Ecosystem: The first and foremost step is to understand and analyze the factors that constitute the financial wellness landscape. For employees, financial wellness means a state of wellbeing about your finances and economic life, while for employers, it means taking care of your employees’ financial wellbeing. It encompasses the balance between working life, economic life, and personal life, including salaries, taxes, bonuses, retirement benefits, child care, healthcare, insurance, education costs, housing, savings, debt, lifestyle, entertainment, household expenses, and financial commitments.
2. Building the Balance: The next logical step after understanding the components of financial wellness is to work towards bringing that balance. Employers can help your employees move through Maslow’s hierarchy of needs by helping them manage their income struggles, spending challenges, providing them rightful income, helping them build savings, and making them feel financially secure. Employees should have access to financial education and training, tax planning, wealth preservation resources, and retirement planning means.
3. Implementing Best Practises: Employers can implement financial management tools to engage employees in healthy financial behaviours. Such tools include automated savings plans, financial boot camps, annual financial check-ups, financial counselling, concierge services, emergency loans, cash flow management, and debt management. Employers can engage vendors, solutions, and institutions that promote financial wellness in the workplace and to reduce financial stress.
4. Building a Business Case: Understanding and implementing the measures theoretically may not be able to achieve the desired results. Therefore, businesses must work towards building a well-defined business case to put numbers on board. Companies should measure absenteeism, turnover, employee performance, medical claims, and employee satisfaction and aim towards achieving the desired numbers. Such data points and numbers will put financial wellness from an objective perspective and even help the employers in measuring returns on their investment in promoting financial wellness in the workplace.
At the end of the day, we all work to live. At Invest Blue, we want to empower people to realise their dreams and goals so that they can live their best possible lives. For us, this always starts with clarifying what is most important about money to you. What are you working towards? What do you want your money to do for you? Our work should fulfil us by allowing us to do something that means something to us, allows us to contribute and share our skills. It should also allow us to create the life we want for ourselves and our families.
Being a financial planning company, Invest Blue prioritises the financial wellbeing of our employees through a range of different benefits and initiatives including training & education and financial planning carried out by one of our financial planners.
As a bottom line, financial stress in the workplace is a real problem, with drastic repercussions and impact on businesses and employees. Financial wellness is equally important as physical and psychological wellbeing and plays a pivotal role in the success of individuals and businesses. Employees need to remain aware of their financial challenges and stress levels and work towards alleviating them. Additionally, employers ought to use innovative technology, open communication, and best practices to promote financial wellness programs in the workplace.
If you are feeling financially stressed as either an employee or employer of a company, speak to us today about creating financial wellbeing in your life or business.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.