Financial wellbeing for employees - why is it important?
Financial health is more than just a good salary. If you help your employees to better understand and plan their own money management, you are investing directly in motivation, satisfaction and loyalty. Because money worries make you ill - and unproductive. Companies that actively promote financial wellbeing create real added value for their team - and strengthen their employer brand at the same time.
Financial wellbeing for employees: Why is it important?
The term "financial wellbeing" refers to a person's ability to meet their financial obligations, reduce debt and achieve future goals - whether in the near or distant future - financially.
Companies can increase the financial wellbeing of their employees by paying a fair salary, offering company pension insurance, or providing access to information or webinars that offer guidance and decision-making aids on financial topics.
"From our consultations, we know that most of the financial worries of employees are due to the fact that many do not know their financial situation exactly and therefore cannot plan well for the present - and certainly not for the future."
Manuela Sontheimer, income and budget consultant, pme Familienservice
Employers who actively look after the financial health of their workforce benefit on several levels:
- Employee satisfaction and loyalty can be increased
- motivation is promoted
- employee turnover can be reduced.
It can also have a positive impact on the company's image, which in turn makes it more attractive to new talent. Financial wellbeing is therefore a win-win situation: for companies and employees.
Impact of financial problems on the well-being of employees
When employees struggle with financial difficulties, it often has a serious impact on their performance and well-being. A financially stressed employee may be less focused, distracted or unmotivated, which affects the quality and efficiency of their work.
In its annual Stress in America report , the American Psychological Association (APA) has repeatedly found that financial worries are one of the biggest sources of stress for adults. In the 2015 study, 64 percent of Americans reported that money is a significant source of stress for them, especially for parents and younger adults.
7 main types of stress caused by financial difficulties
Here are the 7 main types of stress highlighted in this study:
1. chronic stress
Financial worries often lead to long-term, chronic stress, as the feeling of being constantly confronted with money problems is a constant burden.
2. fear and worry
A common stress factor in this study was anxiety about the future, particularly about financial security. Many people worried about their retirement savings, whether they would be able to pay bills or how they would cover future expenses (such as medical costs or debt).
This fear of the future leads to constant worry and a feeling of helplessness, as financial problems are perceived as difficult to solve.
3. sleep disorders
One of the most common physical stress symptoms associated with financial worries is sleep disturbance. 44 percent of adults in the study said that stress due to financial worries keeps them awake at night. Lack of sleep increases stress and can lead to a variety of health problems, including poor concentration, anxiety and depression.
4. stress due to job insecurity
Younger adults and parents in particular reported job stress related to uncertainty about their job or source of income. The pressure to remain financially stable and earn a living can lead to job burnout, which manifests itself in fatigue, frustration and a drop in performance.
5. physical health
Physical symptoms are also an important stress factor. The physical effects of financial stress include headaches, stomach problems, high blood pressure and increased risk of cardiovascular disease. These physical symptoms are both a consequence of stress and an additional health factor that can further exacerbate financial stress.
6. relationship stress
Financial worries often put a strain on interpersonal relationships, especially partnerships. The study shows that many people experience financial burdens as relationship stress, as money problems can lead to conflicts and put a strain on emotional closeness and communication between partners.
7. depression and anxiety
Persistent financial stress contributes to the development of depression and anxiety disorders. The study points out that many people struggling with financial worries feel a loss of control over their financial situation, which increases feelings of helplessness and increases the risk of depressive episodes.
How can employers support employees with financial difficulties?
If, for example, you as an employer learn of an employee's financial burden through a wage garnishment, you should take this as an opportunity to actively offer support - or at least provide confidential information on who the person concerned can turn to. The earlier you provide support, the easier it is to avert negative consequences.
Getting out of debt is often challenging, but not hopeless. There are various approaches - such as drawing up a budget, negotiating with creditors, debt restructuring or, as a final step, personal insolvency. Professional debt counseling as part of EAP employee counseling, for example, offers valuable support and guidance.
On behalf of more than 1,400 employers, the pme Familienservice Group supports employees in achieving a successful work-life balance and being able to work with a clear head.
We support working people in crises, e.g. financial difficulties, conflicts at work, addiction or partnership problems or when it comes to care and childcare.
