We’re not talking about the kind of hangover you get from one too many eggnogs, or even a food hangover from too many cookies. We mean a spending hangover. We’ve all been there—opening January’s credit card statement to see just how much damage we did to our wallets during the holidays. Even the most budget-conscious among us may have been a little too generous in December, which means January came as a rude awakening.
Unfortunately, the distraction of financial stress isn’t unique to the holidays. According to a 2014 survey by PwC, nearly a quarter of employees say their finances are a distraction while at work. This is especially a concern for millennials, 35 percent of whom are diverting their on-the-job attention to managing issues related to personal finance. Research conducted by the Society for Human Resource Management confirms that financial stress is a concern for many HR professionals—61 percent say it’s having “some impact” on work performance, while another 22 percent concede it’s a “large impact.”
The PwC research went a step further and quantified how much productive time organizations are losing to their employees’ financial worries. Nearly one in four employees (39 percent) are spending three or more hours per week thinking about or managing their personal finances. In 2012, MetLife found that another 22 percent have admitted to taking unexpected time off to deal with a financial issue.
And it’s not just reductions to on-the-job productivity that could be negatively influencing your bottom line. As we’ve discussed here before, financial stress can lead to serious health and well-being risks, such as cardiovascular disease, depression and substance abuse. These risks can then translate into a number of unwelcome outcomes for both employee and employer, such as higher healthcare costs and increased absenteeism.
The good news is that many employers are realizing the negative impact their employees’ finances are having on their bottom line and addressing this through financial wellness programs. MetLife revealed that 40 percent of employers are offering some sort of financial education program to their workers, although the makeup of these programs can vary considerably. Having an annual visit from the 401(k) representative may be a good start to managing employees’ financial stress, but this may not be the most important way you can help your workers.
It’s important to remember that financial well-being is part of a larger well-being context, interrelated to your employees’ sense of purpose, physical health, social relationships and community connections. Addressing all of these elements together can bolster the overall success of efforts aimed at helping your employees avoid spending hangovers and other sources of financial stress in the future.
To learn more about financial well-being, its impact in the workplace and holistic methods for addressing it, listen to a recording of our webinar, “Healthcare's Quiet Emergency: The Impact of Employee Financial Well-Being on Health, Productivity and Your Bottom Line.”