Money makes the world go round…
However, its deficiency causes a number of problems that make people feel anxious and forced to stop their lives.
The numbers prove it perfectly. According to a study by TalentLMS, Enrich and Tapcheck on financial awareness training:
- Only 5% of employees say they have met their financial goals. Of those who have not met their goals, the two main obstacles to achieving them are inflation (62%) and insufficient income (48%).
- Recession conversations make 7 in 10 employees more concerned about their financial health.
- 66% of Millennials, 59% of Gen Z employees and 47% of Gen X employees have experienced mental health issues due to money issues.
So we cannot ignore these workplace money concerns. The mental health of your people is at risk, affecting their overall well-being, but also their productivity and performance at work.
In this article, we’ll discuss what frustrates your people, how mental health due to financial stress affects their productivity, and finally, how to overcome this situation with the right financial wellness strategy.
What keeps people up at night
Being in a financial situation or worrying about being in that position has detrimental effects on your mental health.
In fact, financial difficulties are the number one cause of stress in our time, and the stigma around debt means people don’t ask for help. They become isolated and end up with serious mental problems.
What are the most common reasons people face mental health problems due to financial stress? In short, the most common pain points are:
- Rising cost of living
- Low or insufficient income
- Job loss
- Unexpected expenses
- The need for financial independence
- Excessive spending
- Lack of savings
Overall, everything is getting more and more expensive. Therefore, it is difficult for people to keep up with this change. Even when you think about your income and living costs (especially in big cities), you get stressed. You start to worry that you won’t have enough to cover the costs.
At the same time, it is interesting to examine how core beliefs from childhood can influence one’s approach to managing money. For example, if you witnessed your parents struggling with expenses, you will most likely develop a fear of going into debt.
A potential job loss can also trigger feelings of financial insecurity. Many organizations tend to lay off employees due to fears of the coming recession. As a result, people start to fear that they will lose their jobs. And this very idea brings more questions to employees “How do I find a new job with businesses that aren’t hiring?”, “How will I apply for a compensation package that will cover my financial needs in such difficult times?”.
Thinking about them daily can challenge people’s mental stability.
How financial stress affects people’s productivity and overall work engagement
“Employees report disenchantment with the workplace, reduced productivity and disengagement employment due to financial anxiety.” According to an ADP study, people’s productivity is affected by financial stress. Let’s see in detail how this happens.
Some of the employees consider multiple jobs to increase their income. However, this can affect their commitment to your company. Others may start actively looking for better paying jobs, resulting in lower retention rates for your organization.
In addition, employees began to cut costs when it came to entertainment. They sacrifice going out, shopping and spending on streaming services and music. As a result, people now have fewer opportunities to relax, decompress and maintain work-life balance. A lack of fun can lead to isolation and feelings of depression, which then affect people’s performance at work.
At the same time, we should not forget that people’s physical health is affected. More and more people are choosing to sacrifice their workouts to cut costs. However, staying active helps cope with stress levelsand feel stronger, healthier and more productive. People who skip practice regularly get sick and miss work, which translates into reduced productivity on your teams.
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Interestingly, younger generations are the most affected, with millennials being the most financially stressed generation. This suggests that money and mental health concerns will continue to impact societies for years to come.
How can companies help employees?
With the pressure on companies from a potential recession, it’s hard to raise employee compensation and help ease financial stress. Still, employers can help their people.
1. Offer the right types of training
The key to alleviating financial stress is to help your employees build confidence in their financial situation. By offering well-planned financial literacy training, you can share knowledge, tools and resources with your employees and show them how to manage their money worries.
“More than two-thirds of employees say they feel safer and more confident because of the financial health training they received at work,” according to the TalentLMS study on financial health. Through this training, they will have the chance to discover how mental health is linked to money worries, as well as ways to deal with their financial commitmentssave money, cut costs and invest in the retirement plan that works best for them.
Also investing in well-being training is another great solution. In addition to sharing knowledge about how to solve financial problems, supporting employees in a broader sense can also be useful. Wellbeing training is essential to discovering how to live a healthy and balanced life and, as a result, stay productive at work. Employees can follow tips and other advice to reach their full potential both personally and professionally.
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2. Provide financial advice
In addition to financial awareness training, mentoring and coaching (either online or in person) is another way to support a empowering your employees who struggle with managing their finances. Having financial management experts to help your teams can bring benefits to your business.
For example, when your employees gain know-how about planning their finances and know they can turn to someone with expertise, they won’t feel overwhelmed, stressed and unproductive.
3. Create retirement and investment programs
A robust retirement or investment plan at your company is one of the best ways to help your employees plan for their long-term financial security. With a step-by-step guide, they can set their own financial goals, create a personalized budget, plan for taxes and more.
4. Provide a meal allowance
Spending money on restaurants and bars is something that most people have reduced or stopped doing to reduce their spending. But as mentioned earlier, going out and socializing with peers, family and friends helps manage everyday stress.
Your organization could plan to offer employees a meal allowance to motivate them to spend more time outdoors (or indoors without struggling with the bare minimum) and deal with stress as a result.
5. Invest in a flexible work model
Commuting is also a big expense for employees. With the advent of technology, remote and hybrid work models right in your hands, it’s a shame not to start implementing them in your organization. Employees choose their type of workthey feel less stressed about commuting and spending time and money on them and can finally fully focus on their work, be productive and engaged from the comfort of their own home while saving money.
Keep to the right lane
Work-life balance doesn’t mean keeping these two “worlds” completely independent of each other. But it means prioritizing needs and finding a sustainable way to take care of your professional and personal life.
Employers looking to help their people find the right work-life balance may need to think benefits that are not strictly related to their work tasks (such as financial wellness benefits.) Happy employees mean high productivity and performance. In times like these, it is more than necessary to start investing in how your employees feel in order to benefit from all that they have to offer your organization.