By Samantha Grice
In today’s economy, good financial health is a blessing and a rarity.
Crippled by crushing student loans, expensive medical bills, and sky-high housing costs, 56% of Americans have $0 saved for retirement and 44% don’t even have enough money to cover a $400 emergency (Forbes). These statistics indicate an alarming lack of financial literacy, and in turn, low financial wellness. But what is financial wellness? What does the other side of the fence look like?
Most employees and employers may not realize this, but the scope of financial well being is surprisingly large. Having good financial health is more than just making enough to pay the bills or having some extra cash at the end of the month. It also means having a sense of security with your finances, being comfortable about where your money is going, and feeling like your financial goals are attainable. Dealing with this may be easier for managers and business owners, but what most employers fail to see is that it affects their employees too, and this can cost their business dearly—but how?
Problems with money don’t just take a toll on an individual’s wallet; it has an impact on their overall physical and mental health as well. Financial problems can cause stress that can lead to real health complications, which run the risk of affecting an employee’s productivity at work. In fact, Risk Management Monitor points out a variety of ways financial health can impact employee productivity, citing lack of sleep and heart issues as just some of the potential problems. Physical concerns aside, financial stress is also a major contributor to anxiety, which can lead to an unhealthy attitude when dealing with finances. For instance, some people may end up having substance abuse problems, which lowers the quality of their output at work, among other personal things they could encounter.
Financial health can also affect big life decisions your employees make. It can prevent them from buying a home, starting a family, or moving out from their terrible apartment. These problems can fester in the back of their mind, causing them to be distracted and preoccupied at work—and their workflow will definitely suffer.
In an effort to cover costs, some employees will take on multiple jobs, or use credit cards to cover necessities they can’t otherwise afford. Some even consider borrowing from their 401(k) plan, which is a terrible idea, as Marcus points out that borrowing from your retirement plan will cost you more in the long run. Employees will have to repay their loan within 5 years, and if they fail to do so, could get hit with a 10% penalty—leading to even more financial stress.
It should be clear now that the financial well being of an employee not only affects them, but your business as well. Recognizing this and tackling it, even in small ways, should be a vital part of your business practice. For instance, PenFed Credit Union CEO James Schenck emphasizes the importance of encouraging your employees to have a healthy work-life balance, whether it’s through offering robust programs that let them relax, or offering perks that show them you care about their overall well being. Sometimes, tackling financial literacy is the simplest solution. Consider offering workplace seminars and train them on how to handle their finances. After all, there are many free courses and tools available online.
Although there is no one-size-fits-all solution to financial well being, small periodic lessons can do a world of good. It’s crucial that business leaders today consider their employees’ holistic wellness. Take suggestions from your employees, and add or improve your financial wellness programs to suit. Soon, you’ll reap the benefits of a more financially secure and engaged workforce.
Samantha Grice is a financial adviser for small businesses. After watching one too many of her friends’ businesses fail, she’s developed a passion for making sure they grow financially to the best of their abilities. When she’s not working, she’s coaching children’s soccer games in Atlanta, Georgia.