Financial stress is worse than ever: How employers can make it better

Read NoW
Devin Miller
August 17, 2023

Not so many years ago, work life was distinctly separated from home life. Employees were expected to come in and do their jobs cheerfully and effectively, no matter what kind of stresses they might be experiencing in their personal spheres.

Today, we have a different understanding of how work fits into someone’s existence — we regularly use phrases like “work-life balance,” for example, and there are numerous companies conducting research around employee satisfaction and overall stress levels at work. And employers have recognized that the churn of employee turnover is not only inefficient but also quite costly. Gallup estimates that replacing a resigning employee costs companies between 50% and 200% of the employee’s annual salary, which is a conservative estimate.

What’s one of the biggest obstacles to achieving a healthy work-life balance for most workers today? It’s not a secret and it probably won’t come as a surprise. Experts overwhelmingly agree financial stress is one of the largest pain points for employees at all economic levels.

How financial stress affects your employees

What happens to an employee when they’re feeling financially pinched? The effects can spread throughout every part of their lives. Health-wise, financial stress can generate insomnia and is linked to a higher risk of heart disease and other chronic conditions. It’s also linked to diabetes, migraines, depression, and other health problems, both mental and physical.

Mentally, dealing with financial stress is also related to higher levels of psychological distress and health outcomes that can include emotional exhaustion, poor immune response, and even an increased risk of death. Their support networks might also be eroding as a result of the financial problems: Almost three in four (73%) of married or cohabitating adults said financial decisions were one of the biggest sources of tension in their relationships.

This is not a situation that most workers can compartmentalize and leave behind them when they arrive at work. According to PricewaterhouseCooper, financially stressed employees are five times as likely to say that personal finance issues have distracted them at work. They are also less engaged with their workplace, more likely to be searching for a new job, and less likely to say they would recommend their current workplace to friends and family members.

So how can employers help alleviate this problem? Thankfully, there are several options for employers who are aware of the issue and interested in helping employees eliminate financial stress from their lives.

Provide financial education to all employees

Learning how to manage money is a critical skill for all adults to learn, but many of your staff members were probably never coached on the basics. One way you can help everyone who works at your company start to better manage their own financial profile is to provide financial education programs that cover some of the things that they didn’t learn in school.

What kind of financial education would be appropriate? A program that includes topics such as budgeting, saving strategies, debt management, long-term financial planning, and investment basics would be a great start for most people.

Arrange for financial wellness tools and resources

Teaching employees how to build and follow a budget is a good start, and you can take that step further by providing digital tools, apps, and online resources that can help them put that knowledge to use and start managing their personal finances more effectively.

Budgeting apps, expense trackers, financial planning tools and calculators, and other resources can help your employees make financial goals and stay on track with them. Some of those platforms might be bundled in for free with your long-term savings accounts or other benefits, and others could offer company-wide discounts for bulk purchases or subscriptions. Providing them to your employees to help them wrangle their finances could be money well invested!

Offer competitive and fair compensation

It might seem obvious, but one important way employers can help support their employees financially is by providing fair and competitive wages for the work they are accomplishing. In today’s world, when it’s easy to see how others are being compensated by looking it up online, there are more reasons than ever to show your employees that you value their contributions and want to keep them around by way of their paychecks.

The compensation structure at your firm should be transparent and easy to comprehend, and employees should understand why they are getting paid at their current rate and what they can do to increase that pay if they desire. Salaries or hourly wages should be revisited on a regular basis (at least annually) for each employee, and they should also understand the path to advancement at your company.

Create flexible compensation packages

Beyond paying your employees a good wage, there are many other ways you can enhance your compensation and make your company an attractive place to work for both current and prospective staff members.

Some of those compensation add-ons might include flexible spending accounts (FSAs), health savings accounts (HSAs) if you’re providing a high-deductible health plan for your staff, or employee stock purchase plans (ESPPs), which allow your employees to “buy in” to your company. These accounts can provide your staff with a way to accommodate certain large expenses, or in the case of an ESPP, can make them literal investors in your firm at a discounted price.

Another amazing way to compensate your employees is by providing a workplace emergency savings account (ESA). Even if they already have emergency savings, a workplace ESA can be an enormous stress reliever when an unexpected expense emerges.

Introduce Employee Assistance Programs (EAPs)

An employee assistance program (EAP) is a way for your employees to seek confidential counseling and support services when they’re feeling overwhelmed and need to talk to someone. Some of these EAPs can even provide financial guidance for employees who are struggling.

Typically, an EAP will include free and confidential assessments, short-term counseling services, referrals to long-term or ongoing services, and follow-up to check in with the employee and see how they’re managing.

Focus on work-life balance initiatives

We’re now living in an era when many people can accomplish most of the functions of their jobs at their homes, and although there is still some debate about the benefits and drawbacks of remote work to a company, it’s pretty clear that for workers, providing flexible work arrangements decreases job stress and increases job satisfaction.

Flexible working hours, remote work options, and compressed workweeks are some ways that employers can provide work-life balance to their staff without sacrificing much (or anything at all) in terms of productive time spent at work.

Encourage taking full advantage of time off and vacation

It’s one thing to provide ample paid time off or vacation time for your employees to decompress, relax, refresh, and renew themselves, so they can come back to work ready to tackle old problems with a new outlook. But if your employees never take that time off work, then giving it to them is really just an empty gesture.

Make a point to create a culture that values work-life balance and that encourages workers to leave work at work and to take the time off they need to regroup. Vacation time isn’t the only paid time off you should be considering: Sick days, mental health days, and parental leave are some other ways you can provide employees with the time they need to honor their personal and family obligations.

A financially sound employee is a happy employee

Stress about money is prevalent, consuming, and likely to disrupt even the highest-functioning workplaces. But employers aren’t helpless in the face of financial stress, and there are significant steps they can take to help their employees breathe easier and work smarter.

Consider the elements that might be missing in your workplace. Are your employees fairly compensated? Do you provide financial education? Are there flexible compensation options that help employees save for specific needs that don’t include retirement? Do you have an EAP? What’s the work-life balance look like in your workplace?

When you can show your employees that you’re prioritizing their financial health, they’ll not only have a better quality of life, but they’ll be happier, more loyal, more productive employees for you today. 

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