Financial wellbeing refers to financial literacy and control that allows us to live comfortably by balancing income and expenses.
The Employee Financial Wellness Survey by PwC in 2019 reveals that 59% of employees rate financial issues as one of their key stressors. This finding is backed by numerous reports that link financial distress and debt to adverse mental health consequences. For instance, employees who are not financially secure are more prone to absenteeism, lower productivity, and higher stress. A US-based study finds that such financial stress costs companies nearly USD 2000 annually per employee!
On the bright side, financial wellness has a slew of benefits for those who achieve it:
- Fosters engagement and productivity. Employees who are secure about their financial packages are more focused on work, committed to targets, and engage better with their peers, teams, and leaders. With minimal stress or distractions of debt, they align easily with organizational goals and want to be a productive resource for their employers.
- Supports risk-taking. People with predictable and satisfactory income are also more confident about taking risks at the workplace. Here, a ‘risk’ can be anything from asking for a raise, being part of an innovative project, or even transferring to a new role. Any of these decisions can involve significant one-time costs, more effort, and potential instability, which are easier to bear in exchange for the promise of better outcomes, growth, and opportunity.
- Improves future planning. Employees who begin financial planning early are often better prepared for expected and unexpected life events. Most financial wellness programs involve planning for retirement, leisure holidays, lifestyle needs, and even contingency, due to which these individuals are often better able to cope with emergencies.
- Encourages professional development. Financially secure employees are more likely to dedicate themselves to continuous personal and professional development. These individuals want to re-skill, up-skill, network, and push themselves to constantly improve. Without being saddled by the worries of making ends meet, they can invest in creativity and knowledge building, which leads to direct benefits for the enterprise.
Leaders can help by:
- Providing financial education, including financial planning programs and resources. As one of the sought-after benefits among potential hires, financial wellness can go a long way in building loyalty, reducing turnover, and minimizing costs from non-productivity.
- Revamping benefits schemes and perks, to improve the sense of financial wellbeing among employees. This can go beyond monetary incentives and insurance to value-added plans that include healthcare, fitness, and savings.
What individuals can do
As employees, it is up to us take ownership of our financial wellbeing. Begin by setting a realistic monthly budget that includes daily, weekly, and monthly expenses along with an income and savings schedule. Investing money for future needs helps build a failsafe (like an emergency fund) and even eliminate debt. And if you need help building an action plan, consider approaching a financial planner. Start now and good luck with it.