What are the impacts of financial problems on employee health?

5 minutes
June 2, 2022
Porte feuille contenant dix dollars

Money. Couples fight about it. People are stressed about it. In Canada, concerns about money outweigh those related to work, personal life or health.

Keeping control of finances is not always easy. Self-management requires both knowledge and skill, which is not surprising that some people defer to a financial security advisor!

As you read this article, keep in mind that some of your employees may be in dire financial straits. Let’s see how this situation can affect them and the solutions available.

The Numbers

Good news! 64% of Canadians have an emergency fund equal to three months of salary to cover unexpected expenses.

Unfortunately, many are still having money problems. Making a budget—and sticking to it—is not always easy. Many live paycheque to paycheque, which makes saving and investing problematic. Retirement seems like a mirage... and planning for it gets pushed back again and again.

Some statistics:

  • 40% of Canadians are overwhelmed by their level of debt.
  • 48% have trouble sleeping because of their money problems.
  • 37% postpone retirement because they don’t have enough money.
  • 35% of people spend all—or more—of their paycheque.

Constant headlines about indebtedness, inflation and the consumer price index contribute to financial stress. This is a societal problem that we must confront as a society!

Couple parlant de finances

Is financial insecurity taboo?

It would seem so. According to a study by LifeWorks, 63% of Canadians said that being in a poor financial situation would make them feel negatively about themselves.

The fear of being judged also exists. In fact, 39% of those surveyed reported that they believe they would be negatively judged by their coworkers if their financial issues came to light. They are also worried about the impact on their career.

This stigma (perception) prevents people from talking openly about the subject and seeking help, which contributes to a culture of isolation and secrecy.

Bringing your financial problems to work

Money problems don’t just go away, they linger, and this causes employees to be distracted at work.

Not being able to make ends meet can affect concentration and cause stress. Employees are therefore at a higher risk of these other mental and physical symptoms:

  • Anxiety
  • Muscle or chest pain
  • Exhaustion
  • Weight gain or loss
  • Sleeping problems
  • Headaches

Eventually, an employee’s financial stress will affect your company—it’s the domino effect. Distraction hinders productivity. It also increases the risk of mistakes, accidents and poor decision-making.

The consequences of financial stress on your company

The poor productivity resulting from your employees’ financial stress has a cost. Here are the yearly numbers for a company with 200 employees:

  • 3.5 hours/week of distraction
  • 7,521 hours lost per year
  • $1,040 per employee for a total of $208,031

Above and beyond the numbers, financial stress can create HR management nightmares. You have to deal with:

  • Increased absenteeism and sick leaves
  • High workforce turnover
  • A lack of motivation
  • Strained labour relations

Identifying the signs of financial stress

The first step in helping employees is being able to see the signs of financial insecurity.

Train your managers and HR team. They are your eyes and ears in the workplace.

They will need to be tactful and caring if they want employees to open up and, hopefully, break the stigma.

Turn financial stress into financial well-being

Take steps to mitigate the impacts on your company.

By investing in your employees’ financial well-being, you play an important role in reducing this form of stress. Your company will benefit from lower absenteeism and higher productivity.

More than a salary

Are you paying your employees fairly? Do you have a group pension plan? What other benefits do you give your employees?

Remuneration is more than just salary! Ask your employees what they would like and, based on your ability to pay, consider adding benefits like:

  • Group insurance
  • Vacation and leave time
  • Pension plan with employer contribution
  • Share purchase plan through payroll deduction
  • Free parking
  • Employee discounts on products and services
  • Company cars

Raise financial awareness

Did you know that most employee assistance programs (AEP) include access to financial security advisors? Employees can reach out to them for advice.

If you don’t have an EAP, try these alternatives:

  • Quarterly conferences on money management
  • Financial learning activities (Q&A, etc.)
  • Professional referrals

Too many topics to count!

Before diving headfirst into a financial awareness improvement program, identify your employees’ needs. What do they hope to learn?

The world of money is broad: budgeting, saving, borrowing, planning, etc. It’s therefore best to identify the items that concern your employees most, like:

  • Buying a first home
  • The birth of a child
  • Living together (married or common law)
  • Preparing for retirement
  • Marital breakdown
  • Children’s tuition
  • Starting a new job, etc.

Are you short on time and money when it comes to setting up a financial wellness program? Then, focus on quality rather than quantity. You can also refer to financial wellness resources for employers.

Need help?

Fostering employee well-being also means taking care of their finances. Set up solutions to bolster organizational health.

Specialists are there to help. They will recommend strategies that will allow your employees to adopt sound financial habits.

This article is intended for information purposes only and should not be construed as professional advice.