Unbeknown to many, financial worries are also very common in higher earning employees as well and therefore we look at why it is important for an employer not to assume that more pay automatically means improved financial wellbeing.
What can have a negative impact on employee financial wellbeing?
There are many causes of financial worry. For some, simply day to day budgeting can be a difficulty. For others, it can be high levels of debt and for higher earners, it could be the complexity of the tax situation due to their income.
Ultimately, not having their finances organised and poor decision making can add significant amounts of stress to any employee, regardless of their earnings.
How does poor financial wellbeing impact your employees?
It is common for employees to feel distracted at work due to financial worries, which subsequently results in a drop in productivity. Financial concerns coupled with work related stress could trigger more serious mental health issues, such as anxiety or depression. This not only impacts employee productivity whilst they are at work, but also can lead to increased absenteeism.
How can you assist employees with their financial wellbeing?
Salary – as highlighted, evidence suggests that salary is not the only factor in employee financial wellbeing. That said, it is clearly an important factor and paying employees an appropriate salary for their role will reduce their financial concerns and also provide them with a sense of feeling valued and therefore motivated to achieve.
Financial benefits – supplementary financial benefits in addition to salary can also give employees an opportunity to take control of their finances and their future. Good pension contributions, provision of insurance and access to short term finance through their employer can all contribute to employees spending less time worrying about their finances.
Flexibility – offering flexible working can help employees balance other family commitments and therefore reduce the likelihood of incurring care fees for their child or elderly relative for example.
Financial education – arguably the most important element in employee financial wellbeing is providing them with the appropriate support to look after their own financial affairs. By providing financial education, employees are likely to take more control of their finances. Once these skills have been acquired, they are with the employees for life, making them much more resilient to financial issues in the future. This can be viewed as a more long-term solution for employee financial wellbeing.
Long-term wellbeing
The key messages for employers are firstly, remember that salary is not the only answer to employee financial problems. Many high earners have poor financial wellbeing and are likely to need assistance too.
Secondly, added financial support may assist employees in the short term, but ultimately, if an employee is unable to manage their finances well, they will always require additional financial benefits. Therefore, the provision of financial education should be seriously considered to assist employees with their long-term financial wellbeing.
