The Covid-19 pandemic isn’t just a health crisis — for many, it’s a financial one, too. In fact, nearly nine in 10 Americans say the pandemic has created financial challenges for their household, according to the National Endowment for Financial Education (NEFE). As you hire new employees, keep in mind, some may be returning to work after a long period of unemployment in 2020. Or, you may have longtime employees with spouses or partners who’ve lost their jobs or had their hours reduced. In any case, they may be facing personal financial challenges such as paying for housing, food or other basic needs.
Your employees may not talk openly about their financial stressors at work. And you may see their personal finances as just that — personal. Still, you should be aware of your employees’ financial challenges, because these money stressors can impact their overall well-being, productivity and focus on the job, and even their company loyalty. What’s more, the uncertainty of the pandemic will likely continue to impact your employees’ financial and emotional well-being well into 2021.
Financial Stress is Taking a Toll
While the pandemic has undoubtedly increased worries about financial security, many employees have found themselves facing financial challenges, even in the best of times. According to a recent Willis Towers Watson survey (conducted before the pandemic hit the U.S.), 38% of employees live paycheck to paycheck. And that’s across all income levels — even higher-paid workers have trouble making ends meet.
Add in the pandemic pressures of juggling working from home, childcare and other household responsibilities, and it’s no wonder employees rank their personal finances, including concerns about their credit, as their number one source of stress. Some may have been forced to slash household expenses in the last year, or they may be caring for a sick relative, or dealing with a medical issue themselves. All of these are putting an extra strain on your employees… and their household finances.
Here are the top 10 financial challenges your employees may be dealing with after a bumpy 2020, along with some simple ways you can help.
Drum Roll: The Top 10 Financial Stressors
According to NEFE, the top 10 financial stressors are:
- Having enough in emergency savings
- Job security
- Income fluctuations
- Paying utilities
- Paying rent or mortgage
- Financial market volatility
- Paying down/off credit card debt
- Having enough saved for retirement
- Paying health care bills
- Putting off major financial decisions
These financial challenges can cause your employees to experience higher levels of stress, hurt their health and well-being and negatively impact their job performance.
Your Employees’ Financial Challenges Could Be Costing You Money
If it isn’t obvious by now, here’s why this matters: Your employees’ money concerns are more than a big-picture social issue — they have implications for your business. Employees who are financially stressed are 11 times more likely to have sleepless nights, 10 times more likely not to finish daily tasks at work, nine times more likely to have conflicts with coworkers and two times more likely to be searching for a new job.
Put another way, employees with financial challenges are distracted and less productive at work, and they’re more likely to look for another job. A MetLife study estimates that for a company of 10,000 employees, financial stress results in $28,830 in lost productivity every week, or a total loss of $250 billion across the economy each year.
So if you think your employees’ financial well-being isn’t your problem, here’s why you should care: Their financial strife is costing your company money. It’s not all doom and gloom, however. Employees are more open to financial advice than they’ve ever been, and they’re looking to their employers for help.
3 Simple Steps to Address Financial Stress
“Financial wellness” has been a buzzword in employee benefits for several years. In fact, 53% of companies offer financial wellness programs designed to help employees better understand how to manage and gain control over their finances. The idea is to increase their financial literacy to help lower financial anxiety and heighten feelings of security. If you choose, you can implement a financial wellness program at your company to help your employees overcome their financial challenges.
However, if you’re not quite ready to launch a full-blown financial wellness program, here are three simple steps you can take to address your employees’ money concerns:
- Consider partnering with financial professionals to offer financial planning services to your employees. These professionals can help your employees build an emergency fund, deal with ups and downs in income and save for retirement, as well as take other important steps to get their finances on track.
- If your organization offers a 401(k) plan, your provider may offer educational tools and resources you can use to help employees take control of their day-to-day finances and save for retirement.
- Employees who are experiencing cash flow issues may struggle to pay bills on time, which can negatively impact their credit score. Offering a tool like ScoreMaster can help your employees achieve their best possible credit score in 20 calendar days so they can feel more confident about their finances and be more focused and productive at work.
Improving your employees’ financial well-being doesn’t have to be expensive or complicated. At a time when they’re just looking for some guidance and relief, finding creative and low-cost ways to support your employees through their financial challenges is a perfect investment. Not only will it lower your employees’ stress and anxiety, but it will also build their trust in you — and their loyalty. That’s a return on investment you can count on to help strengthen your company today and in the future.
Discover how ScoreMaster can support you in improving your employees’ financial well-being by helping them achieve their best possible credit score within 20 calendar days so they’ll be better equipped to handle their finances in 2021 and beyond.