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Creating a Culture of Financial Wellness – Understanding the Potential Consequences of Employee Financial Stress is the First Step

Given the ongoing challenges related to inflation, it likely comes as no surprise that employees are feeling the pressure of meeting their day-to-day financial needs. According to PwC’s 2022 Employee Financial Wellness Survey, employees say that money worries and financial stress have had a severe or major impact on the following:

  • Mental health: 34%
  • Sleep: 33%
  • Self-esteem: 30%
  • Physical Health: 23%
  • Relationships at home: 21%
  • Work productivity: 18%
  • Work attendance: 15%

The survey identified three critical areas where employee financial stress is most likely to negatively affect your organization’s bottom line. Gaining a better understanding of these and how you can help can have a positive impact on both your organization’s culture and it’s future success.

1. Worker Productivity

55% of stressed employees who are distracted by their finances at work spend 3 or more hours

each week at work dealing with their finances. Of those employees:

  • 67% struggle to pay their household expenses on time each month
  • 64% are using credit cards to pay for necessities they couldn’t otherwise afford
  • 25% have saved less than $1,000 for retirement
  • Over half plan to postpone retirement
  • Millennials are more likely than Gen Xers to say their productivity has been negatively affected

Insights for Plan Sponsors

Many millennials are in their 30s and dealing with the financial implications of a variety of life events.  PwC suggests that employers consider financial planning workshops and coaching designed for employees dealing with things like buying a first home, getting married, becoming a parent or going through a divorce.

For the broader group experiencing a severe or major impact on their productivity, PwC suggests that employers consider directing them to financial wellness resources. Survey results indicate these employees are especially receptive to help. More than half said that they’re aware that their employer offers services to assist with personal finances, are more likely to have used the services, and are more likely to rate them as extremely useful. They’re also more likely to want a higher touch when it comes to their finances.

2. Retention

Thirty-eight percent of financially stressed employees indicate they are looking for a new job. Not surprisingly, the top reason is the need for higher pay (65%). In addition, 54% of these workers don’t believe their employer cares about their financial well-being. Employees looking for new jobs are relatively evenly split across gender, salary band and industry, likely due to the larger economic and inflationary pressures facing all workers.

Survey Insights for Plan Sponsors

Employers know all too well the high cost of employee turnover. To help ensure your employees know you care about their financial well-being,  PwC suggests that you aggressively promote benefit programs that help employees stretch their money further, such as financial coaching focused on areas where people need immediate help like budgeting, paying down debt and building an emergency fund.

3. Mental Health

Among financially stressed employees, 49% said that money worries had a severe or major impact on their mental health in the past year. Compared to all other employees, they are:

  • Seven times more likely to say that financial stress has severely/majorly impacted their attendance
  • Six times more likely to say that financial stress has severely/majorly impacted their productivity
  • Twice as likely to be looking for a new job

Survey Insights for Plan Sponsors

Given the connection between financial wellness and mental health, PwC suggests that employers consider offering financial coaching alongside their mental health resources. While fairly evenly split across racial groups and salary bands, employees whose mental health has been severely or majorly impacted by their finances are more likely to be female and millennial. Employers should consider including financial wellness topics as part of employee resource group sessions they are likely to attend.

PwC also notes that these employees are nearly twice as likely to say that one-on-one financial coaching via phone or video chat is extremely helpful, likely because of the intimate and confidential nature of their financial issues. They also suggest that employers clearly explain that they will receive reports of financial wellness activity completion for program tracking purposes only and will not be privy to what an individual employee discusses with a financial coach or views via online financial wellness resources.

 

PwC’s 2022 Employee Financial Wellness Survey can be found at: https://tinyurl.com/43ym393c.

PwC. (January-February, 2022). 2022 PwC Employee Financial Wellness Survey. https://www.pwc.com/us/en/services/consulting/business-transformation/library/assets/pwc-2022-employee-financial-wellness-survey-results.pdf.