Financial concerns can have a direct effect on an employee’s emotional and physical health. Stress over money has been linked to migraines, depression, sleep problems, heart disease, diabetes, and other serious conditions. Financial stress can impact nearly every facet of a person’s life, including their ability to perform their job duties effectively.
Ever-increasing medical bills, a large amount of debt, and many other scenarios can lead to a financial crisis. To aid employees in need of financial relief, many employers are now offering financial wellness benefits as part of a comprehensive benefits package. In fact, the number of employees offering financial wellness programs increased to 46 percent in 2021, up from 40 percent in 2020.
Before implementing a new financial wellness benefit, consider how this type of program could improve the financial health, physical health, and mental health of employees. It is also important for employers to understand the costly consequences of waiting to add financial wellness to their employee benefits package.
How Financial Wellness Benefits Improve Employee Health
According to a 2021 survey published by the Society for Human Resource Management (SHRM), approximately 74 percent of HR professionals surveyed reported that their organization has not added or expanded benefits to help employees manage their financial stress since the start of the COVID-19 pandemic.
Financial wellness can include a variety of factors that relate to a person’s current relationship and standing with money. Employees who are financially well can confidently handle their present and future financial needs.
It is important to understand how financial wellness benefits can improve employee health financially, physically, and mentally.
While it may seem obvious that financial wellness benefits can improve an employee’s financial health, employers should take the time to understand how these benefits can make a difference.
Employees who have poor financial health are often unable to effectively manage and prepare for their current and future financial needs. These individuals may have difficulty taking action when stressful financial situations occur and may make poor financial decisions due to anxiety, insecurity, or fear about their financial situation.
The longer that an employee is forced to deal with financial problems, the more likely they are to continue making poor choices regarding debt, money management, and similar financial topics. Breaking this exhausting cycle can be challenging, especially when employees do not have the resources necessary to make essential changes.
Many employers already offer their workforce certain benefits designed to improve their financial standing, such as a 401(k) that helps workers accumulate long-term savings for retirement. Educational benefits can also be useful for certain employees; however, these types of benefits do not always provide the financial education employees need.
Offering a comprehensive financial wellness program as part of an employee benefits package can have a powerful impact on a workforce’s financial health by delivering the resources, tools, and knowledge needed to reach specific goals.
Financial matters are one of the most common causes of stress. According to a recent Harris poll, money was found to be a major source of stress for 44 percent of respondents. Some of the most common causes of money problems included low income, too much debt, the rising cost of healthcare, and a lack of retirement savings.
Stress can have a significant impact on an employee’s physical health, resulting in ailments like respiratory symptoms, high blood pressure, high rates of tension, and somatic issues. In addition, stress can lead to chronic sleep-related difficulties like fatigue, insomnia, and night terrors which affect a person’s ability to perform their job duties.
When an employee’s physical health suffers, the business that they work for suffers too. The physical burden of financial stress can result in higher rates of absenteeism and lower productivity in the workplace. Chronic financial and physical stress can also lead to increased healthcare costs.
Fortunately, financial wellness benefits can help reduce these costs and help employees reach a more comfortable financial standing. In some cases, implementing financial wellness benefits can actually save businesses money in the long term.
Along with physical stress, financial problems can negatively impact a person’s mental health. When an employee is dealing with never-ending bills, growing debt, and insufficient income, it can cause chronic worrying, depression, and an overall feeling of being overwhelmed.
According to the Money and Mental Health Policy Institute, approximately 46 percent of people with problematic debt also suffer from a mental health problem. In addition, 39 percent of people with existing mental health problems revealed that their financial situation has worsened their mental health.
Depression and feeling low can cause employees to have a general lack of motivation. Some employees will overspend in an attempt to feel better about their life or avoid taking necessary actions to help manage their spending, such as opening bills that come in the mail.
It is not uncommon for certain situations to trigger feelings of panic or anxiety, such as opening envelopes. Constant worrying about money can lead to sleep problems and can affect a person’s relationships and social life. Some employees may feel isolated or lonely as they do not have the funds needed to go out and do the things they like to do.
Financial wellness benefits can help by educating employees on how to make good decisions when it comes to money. Once employees have their spending and money situation under control, many people notice a significant improvement in their mental health.
What to Know About Offering Financial Wellness Benefits
Financial wellness programs are about much more than just finances. There are many aspects to consider when establishing a new or expanded benefit, starting with what the benefit consists of. There are many misconceptions as to what a financial wellness benefit is and what it is not.
A quality financial wellness program offers a combination of resources, tools, and education to help employees take the appropriate actions to reach their goals. It is not enough to provide a budgeting app or host a financial education webinar. Employees require ongoing benefits to help manage their finances over the long term.
When choosing to bring in professionals to assist employees with their finances, it is necessary to hire the right experts. Employees often thrive when provided with personalized, one-on-one guidance. Financial professionals should have strong credentials and should be bound by the fiduciary standard.
Offering financial wellness benefits can have many positive impacts in the workplace. They can lead to higher productivity levels, lower health care costs, higher participation in voluntary benefits, fewer workers’ compensation claims, less reported stress from employees, a reduction in 401(k) loans, higher participation in employer-sponsored retirement savings plans, lower employee turnover, and fewer days of work missed by employees.
Reach Out to New City for More Information
The pandemic has put a significant strain on businesses and their employees. Although the economy is slowly recovering, employees continue to struggle financially. To address their ongoing financial issues, many employees are choosing to leave their current job in search of employment that offers more benefits and better pay.
At New City Insurance, employers have access to professional benefits consulting services designed to help businesses reach their goals. For more information about how financial wellness benefits can impact employees or to request a consultation with a benefits consultant, contact New City Insurance today.