by Craig Cohen
More businesses than ever are recognizing their need for a financial wellness benefit.
Three out of five companies have reported they’re already focused on workers’ financial needs as a business goal, reports AON. However, many employers still lack a solution and some don’t yet understand what real financial wellness looks like — or why so few employees have it. If your company is still in doubt about whether employees could use some helpful financial education, there are some undeniable signs and symptoms you can look for. Here are a few clues that your workers need emergency financial treatment:
Workers are asking for payday loans.
Do your employees frequently ask for advances or loans against their salaries? It’s a telltale sign of major money problems. Think about it: No one really likes asking someone else, even friends or family, for money. So when your employees work up the courage to ask, they’ve likely gotten pretty desperate. They’re also likely to make this request more than once. Rather than a loan, what your people need is some real financial education. A loan doesn’t help their problem — even if it provides temporary relief, the money they owe your company will only make the financial strain worse. Not to mention that administering the advances adds one more thing to your own long to-do list.
Employees are borrowing or withdrawing from their retirement accounts.
This is the same symptom as the above, but in a slightly different form. Some workers might believe that withdrawing funds from a retirement account is just like taking money from a regular savings account, when, in fact, they’re paying big penalty fees and stopping compound growth. While borrowing avoids those issues, it’s never the solution to being broke. Especially because the majority of your workers are already deeply in debt. New loans will only aggravate the problem! And loans against a RRSP are even worse than payday loans, because they sap the very savings your employees have set aside for the future. It’s like pawning an heirloom to pay the rent — not a good plan!
Physical and mental workplace absenteeism is on the rise.
A common pain point for businesses that often results in workplace absenteeism is personal financial problems. It can happen in a few ways:
- More days out of the office. Financial stresses have resulted in a 34% increase in absenteeism and tardiness. Additionally, employees with very high financial anxiety are twice as likely to take sick time off when they’re not ill.
- Absentmindedness. Money trouble can cause more on-the-job distractions. We all lose focus sometimes, but those who are financially stressed report being distracted by their money issues at work 44% more often than their unstressed peers.
- Missing effort. Even if they’re focused on their tasks, your money-stressed workers can’t bring their A-game. Twenty-eight percent of that group say financial struggles prevent them from their best work.
- Turnover. This one might hurt the most. Seventy-two percent of workers are satisfied with their job, but 60% are still looking around for a new job with higher wages. Without new money habits, another dollar an hour won’t bring any significant financial progress. Meanwhile, you’ve lost another valuable worker and face the high cost of replacing them.
Your health-care costs are increasing.
Financial problems can’t be compartmentalized — not by employees or your company. Money stress leads to related physical issues that can drive health-care costs as well. What’s more, people who don’t think they can afford a doctor visit for a health issue will just skip it. In the long run, this aggravates both physical and financial problems. As with all of the signs we’re discussing, rising health-care costs are more like a symptom than the main cause of the larger problem. The lack of financial wellness is a deeper danger that’s causing all sorts of issues for workers and employers alike.
More employees are delaying retirement.
Have you noticed more of your workers celebrating big milestones…like their 70th birthday? The Baby Boomer share of the workforce is rising, and as many continue to delay retirement, their share of the US labour market is expected to hit 25% by 2024, and in Canada by 2036. Many continue because they love their work, while others do it because they can’t afford not to. In either case, working past retirement age can be risky for both employees and employers. That’s because trying to work forever is associated with workplace injuries and accidents, as well as rising health-care costs for businesses. A better solution is to help employees prepare for a happy and healthy retirement as early as possible in their careers.
There’s low participation in the company’s RRSP.
One more sign your team might not be in the best financial shape is low participation in your retirement savings plans. In case you haven’t noticed, broke people don’t invest. They not only don’t have much money to contribute, but they may be unsure how to go about doing so even if they could spare the cash. This is a story that begins with a whole lot of debt, little or no budgeting know-how, and a paycheque-to-paycheque lifestyle. No wonder this lack of knowledge and bad habits don’t produce a lot of enrollment or saving in retirement accounts.
Here’s How to Help Your Team Get Real Financial Wellness
By now it’s clear that none of these symptoms can be blamed for the real issue underlying them all — bad financial behaviour and, in many cases, a simple lack of understanding. Solutions need to teach employers and employees that while financial wellness might begin with a few key pieces of knowledge, it’s mostly about taking the facts and putting them into practice.
The key is changing behaviour from the old bad habits keeping employees in trouble to a new set of habits that help them build wealth. Your financial wellness solution won’t work if it doesn’t actually change behaviour! When employees improve their personal finances, those changes impact a company’s entire culture and employee productivity. Financial wellness goes both ways and is a win-win for everyone involved.
This article originally appeared on SPARK Powered by ADP.