“Money can’t buy happiness” might hold some truth, but financial well-being and mental health are deeply connected, shaping not only the lives of individuals but also the success of the companies they work for. And much like workplace mental health offerings, an organization’s approach to employee financial wellness must be multi-faceted to be successful – joining education, resources, and support.
Recent studies have illuminated the powerful interplay between financial health and mental wellbeing. According to MetLife, employees who felt secure about their finances reported significantly higher levels of happiness (84% vs. 55%) and engagement (78% vs. 53%). This isn’t a mere coincidence; it’s a testament to the fact that employees who aren’t burdened by financial stress are better equipped to focus on their work and personal lives.
On the other hand, financial stress has far-reaching repercussions. In a 2023 PWC study, 57% of respondents identified finances as the leading cause of stress in their lives. It erodes sleep quality, self-esteem, physical health, and relationships at home. Of course, these impacts also hamper work performance, draining creativity, collaboration, and engagement.
Companies are increasingly recognizing the bottom-line impact of employees’ financial wellbeing. A 2022 Bank of America report finds that nearly all employers (97%) feel a sense of responsibility for their employees’ financial wellness, and 62% said they felt “extreme” responsibility. Further, 84% believe that offering financial wellness tools improves employee retention, and when joined with physical and mental wellness resources, there were noticeable improvements to productivity (50%) and innovation (36%).
Yet the fact remains that more than 60% of employees in the survey still said they were stressed about their financial situation. Even as organizations feel responsible for supporting financial wellness, driving positive impact depends on execution. The answer lies with an “all of the above” approach:
· Build financial literacy. Employers are already a trusted source of benefits and information. This makes them a natural home for financial literacy initiatives that help employees understand and enact concepts like saving, investing, budgeting, and building and improving credit. This also enhances the impact of financial wellness offerings like a 401(k) plan or Health Savings Account.
· Offer access to professional financial services. 40 percent of employees want access to advice from an investment professional, and the share of companies who offer this benefit has been increasing. Professionals can offer guidance on improving credit scores, retirement, major purchase like a home, and more.
· Harness digital tools. Over 50 percent of employees want benefits information sent to their email, and 30 percent want financial advice through a digital portal. Employers can leverage these digital offerings to make financial information easier to access, visualize, and put into action. One Mind at Work member Fidelity Investments offers a Financial Wellness Employee Engagement Toolkit as a place to start.
· Make financial health the default. Where possible, employers can lean into the concept of the “nudge” – for example, with auto-enrollment or auto-escalation for retirement savings plans. This approach makes “opt in” the default, so it’s easier for all employees to save.
Workplace mental health and employees’ financial wellness go hand-in-hand. As organizations recognize this vital connection, they can enact an inclusive, well-designed approach that empowers people for both financial security and mental health.
Follow me on Twitter or LinkedIn. Check out my website.