Organizations have only recently understood that employee wellbeing is an aspect that affects both employees and employers. Financial wellness, in particular, goes hand in hand with emotional health and too many employees in America are worried about money. With millennials making up the largest generation in the U.S. labor force, 65% of them are worried about their finances. It’s no wonder then that many are looking for employers who offer student loan repayment assistance as 44.7 million Americans owe a total of over $1.56 trillion in student loan debts. And with 56% of workers with loans and other debts indicating that they worry about repaying their loans either ‘often’ or ‘all the time’ it’s affecting their work and costing their employers.
With roughly one in two employees worried about their finances, many suffer from depression, panic attacks, and lack of sleep, which can lead to chronic physical ailments. Clinical psychologist Carla Marie Manly explained that the burden of debt has been shown to take a major toll on mental and physical health. She noted how chronic stress can lead to long-lasting harm like greater rates of heart disease, diabetes, and chronic sleeplessness due to elevated levels of stress hormones like adrenaline and cortisol.
This is because when we’re stressed the body’s fight-or-flight response, which developed as a survival mechanism to allow our ancestors to react quickly when faced with immediate danger, kicks in flooding the body with stress hormones. ‘The Link Between Physical and Financial Health’ by Marcus quoted financial coach Elisabeth Donati, who said that money is “tied to our basic, hardwired drive to survive.” In fact, as Donati explains, “Financial stress seems to trump almost every other kind of stress except health stress.”
In turn, it also ends up costing millions in productivity for their employer. A survey by Salary Finance indicated that American businesses are losing $500 billion every year due to employee financial stress. Lost productivity is costing employers 11% to 14% of their payroll expense, or $2,000 per employee every year. On a national level, lost productivity due to financial worries comprises 2.5% of the U.S. GDP and it’s a problem that gets worse every year. Mental wellness quickly deteriorates if financial solutions aren’t made available.
Now more than ever employers understand that by investing in the general and financial wellbeing of their employees they can net a substantial ROI. While most employers focus on aspects like flexible work hours, remote work, good work-life balance and employer-matched 401(k), for example, to keep employees happy and help reduce their stress, there is a growing need to help employees with financial wellbeing. It starts with financial literacy education in the workplace. Nearly two-thirds of Americans could not pass a basic financial literacy quiz, so teaching them how to budget and save is a step in the right direction to prevent employees from getting into crippling debt in the first place.
Second, an employee assistance program that helps connect employees with financial and mental health services they need has minimal yearly costs to the employer. Other options include setting up a rainy-day fund by partnering with zero interest loan providers that can help your employees in times of need. Although these initiatives have costs involved, over time they can pay dividends in employee retention, engagement and increased productivity.
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By Lana Deron