From maxed-out credit cards and mounting student loan debt to rising interest rates, more workers across the country are struggling to make ends meet. A recent survey found that the number one cause of anxiety among employees is money, with 65% reporting financial stress.
Lower-income earners and households are experiencing the most financial anxiety, with 57% of Americans with an income of under $50,000 saying they’re under more stress than a year ago, versus 45% of those with incomes of $100,000 or more.
While 84% of US employees say their employer should be responsible for their financial wellbeing, just 55% believe their company is concerned about their financial wellness.
Employees who are experiencing financial strain are often embarrassed about these issues. Many will be reluctant to reach out for help and end up suffering in silence. All this can take a negative toll on their work performance.
When employers make a concerted effort to improve employees’ financial wellbeing, it can increase their productivity, job satisfaction and engagement, ability to focus, and mental and physical health.
In this article, we’ll explore some of the tell-tale signs that your employees might be struggling financially and consider some practical initiatives you can put in place to increase their overall financial wellbeing.
Here are 5 of the most common indicators that your workers aren’t coping financially:
You should be concerned if a worker approaches you to ask for a pay advance to help them deal with an unexpected expense, such as a medical bill or car repair.
Few people feel comfortable asking others for money, so if your employee has summoned up the courage to ask for a pay advance, they’re probably pretty desperate.
Many people resort to payday loans when struggling to pay their bills. Payday loans are short-term but high-cost loans due in a single payment on a borrower’s next payday. The median payday loan is about $350, and the typical fee amounts to an average interest rate of 391%.
Many payday loan borrowers aren’t using the lowest-cost repayment option in states where it’s available. This perpetuates a cycle of high fees and debt. Worse still, in some cases, unscrupulous payday lenders withhold information about these “no-cost extended repayment plans” to generate more revenue.
According to recent research, one-fifth of US workers are currently making withdrawals from their retirement savings. While accessing these funds might bring a financially stressed employee some temporary relief, it will also result in them being subject to some hefty taxes.
In addition, it reduces the amount of compound growth on the employee’s retirement funds – important savings that are meant to support them in their old age.
One of the most common manifestations of personal financial problems on the part of an employee is frequent absences from work. Sometimes this takes the form of general tardiness (arriving late, leaving early, or taking unauthorized or extended breaks.) Employees with high levels of financial anxiety are also more likely to take sick time off when they’re not really ill.
Other forms of absenteeism include absentmindedness, distraction, or lack of motivation and effort. Financial struggles can prevent people from concentrating and delivering their best work.
When employees are struggling financially for extended periods, it will ultimately impact every aspect of their lives. Financial stress often causes people to suffer sleepless nights, not eat properly, or fail to exercise. In extreme cases, financial stress can lead to more serious health issues such as high blood pressure or cardiac events.
Financial anxiety can also lead to mental health issues such as depression, which will ultimately interfere with employees’ ability to communicate and co-operate with family members, friends, co-workers, and customers.
Responsible employers should be thinking hard about ways to help employees (both current and prospective) get on the front foot financially. Here are some simple ways to do this:
Unfortunately, many Americans have never been taught how to handle money. In fact, the average American correctly answered only 52% of the questions on the TIAA Institute-GFLEC Personal Finance Index in 2021.
Today, more adults are seeking help with financial literacy, and increasing numbers of employers are stepping in to support them by offering financial education programs.
A financial wellness program might include online, telephone, or in-person counseling to address some or all of the following aspects of financial wellness:
One popular and effective option is to incorporate financial wellbeing features into your employee communication app. Here, employees have instant, on-the-go access to trusted financial guidance, money management advice, and handy budgeting and savings tools.
In parallel with efforts to assist employees in improving their overall financial wellness, employers should ensure they have the correct mental health resources in place to help anxious or stressed people cope. Employee assistance programs (EAPs) are one way to achieve this.
However, bear in mind that implementation is key when it comes to EAPs. About 30% of US workers don’t know how to access their company EAP, so the first step is to ensure that you provide clear and ongoing communication and promotion.
It’s also important to address the stigma that some employees may associate with EAPs, so you need to ensure complete confidentiality. Also, consider including employees’ family members in your wellbeing programs and activities. Encouraging the involvement of affected employees’ family members will incentivize involvement and enhance employees’ sentiment that you’re prioritizing their wellbeing holistically.
Another effective way to provide income support is to give your workers more flexibility around when they get paid and integrate on-demand pay into your payroll system.
This concept is known as Earned Wage Access (EWA). As the name suggests, EWA gives people the option of accessing the money they’ve already earned but not yet collected in the event that they find themselves short of cash before their regular payday.
With Payactiv’s EWA solution, there’s no fuss for employers or employees. Our software can be easily integrated into your payroll and time management systems. Your employees can immediately access money for hours already worked, transfer it to their bank, load it on a Payactiv card, or pick it up in cash at Walmart. They can even use their earned wages to call an Uber and get daily necessities from Amazon.
EWA gives employees a greater sense of control over their finances and eliminates the stress of dealing with unexpected bills.
Payactiv’s all-in-one Livelihood Platform takes a holistic approach to providing employees with financial support. Our services enable you to help your people address their immediate financial needs, making it possible for them to take positive steps toward long-term financial stability and growth.
In addition to offering financial support via on-demand access to earned wages, we coordinate cashless payouts of tips and mileage, off-cycle pay, savings and budgeting tools, a discount marketplace, and a communication platform for deskless employees.
We also facilitate fast, flexible shift coordination. You can give your employees easy access to your corporate shift scheduling system via their smartphones. They’ll get alerts when new or additional shift openings appear, which they can pick up with just a click on the Payactiv smartphone app.
Attracting and retaining quality employees is an ever-present pain point for HR...
* The Payactiv Visa Prepaid Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll-free at 877-747-5862, 24 hours a day, 7 days a week.
**Central Bank of Kansas City is the issuer of the Payactiv Visa Prepaid Card only and does not administer, endorse, nor is liable for the Payctiv App.
1 Standard rates for data and messaging may apply from your wireless provider.
Google Play and the Google Play logo are trademarks of Google LLC.
Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.