How does financial stress impact your employees?

Stress can happen for many reasons, from relationship worries to work-related stress. Financial stress is typically related to money worries, such as concern that you won't be able to pay your bills. It can also come from anxiety about the future and whether you'll be able to maintain your standard of living.

Employees may experience financial worries due to the rising cost of living and concerns about paying their regular living expenses. Alternatively, as prices rise, employees' financial stress levels could increase as they must sacrifice things they enjoy to pay the bills.

Your employees may also have money worries due to debt or worry that uncertain economic times may lead to redundancies. Some financial concerns can come from unexpected expenses or an absence from work, leading to a drop in their usual income levels. A lack of literacy in ways to deal with their personal finances can also impact employees' financial well-being.

Financial stress can impact employee well-being in various ways. Economic hardship can result in debt, homelessness and reduced quality of life. We examine some of the most common well-being issues resulting from financial worries and how these affect your employees and business.

Mental health issues

Financial stress can have a significant impact on employees' mental health, as mental health issues are related to their financial situation. Conversely, mental health problems can impact an employee's ability to manage their finances, creating a vicious cycle of poor mental health and financial well-being. Employees experiencing financial stress may have symptoms of anxiety or depression or experience low self-esteem as they feel ashamed to talk about their money worries. Symptoms can include a loss of interest in activities they usually enjoy, irritability or disrupted sleep, which can exacerbate their symptoms.

Research by the Office of National Statistics found that 49% of adults who were behind with their energy bills reported experiencing anxiety and reduced happiness.

Difficulty concentrating

Stressed employees can experience difficulty in concentrating, which can affect work performance and lead to reduced productivity and job satisfaction. Financially stressed employees may seek employment elsewhere, particularly if it offers higher wages and improved benefits.

Higher stress levels can also cause increased absenteeism as employees struggle to motivate themselves to come to work. Managers may identify a behaviour change but be unaware of the cause unless employees feel able to discuss financial issues at work.

Relationship issues

Stress and anxiety can impact employees' relationships at home and in the workplace. One in five people in the UK has experienced a relationship breakdown due to financial stress.

In the workplace, stressed employees may become irritable, reducing team cohesion, employee morale and productivity.

Physical health problems

Physical and mental health are linked, meaning mental health issues related to financial stress can cause physical symptoms. Absences from work due to physical illnesses can also affect financial well-being because of reduced income. Chronic stress weakens the immune system and increases the risk of chronic conditions. Stress can cause headaches, digestive problems and sleep issues.

Stressed employees may also develop unhealthy habits as a way to distract themselves from their financial situation, such as overeating or excessive alcohol use.

Economic factors have slowed wage growth, while increases in the minimum wage and National Insurance have likely made it more expensive for your company to offer increased wages across the board. The cost of living crisis has also impacted employers by increasing energy bills.

Here are some other ways to support your employees' financial well-being.

Provide managers with mental health training

Mental health training helps managers identify the signs of employee stress and start conversations to support their staff. Many employees feel unable to discuss financial problems at work. However, training managers to start conversations sympathetically and constructively helps employees feel supported and able to seek help.

Create a culture of financial openness

Mental health awareness has increased, but money worries remain a taboo subject. A positive workplace culture should treat discussions about financial well-being as vital to promoting good mental health. Training about financial wellness can help to open the conversation, but managers must also lead by example and ensure open discussion is accepted and normal.

Provide financial support during sickness absence

Financial problems can occur because of unexpected illness or injury that prevents employees from working. Depending on your sick pay policy, they may experience an immediate drop in income or see their wages decrease if they remain absent long-term.

Your company can invest in insurance to provide employee benefits that offer a safety net to employees during a sickness absence. Group income protection insurance pays employees a percentage of their usual salary to cover their living expenses while they can't work.

Critical illness insurance pays a lump sum if an employee is diagnosed with a serious illness, while group life insurance can also pay out in cases of terminal illness.

Offer money-saving employee benefits

A discount scheme helps your employees save money on various expenses, including groceries, holidays and gym memberships. Most health insurers have a member rewards scheme, with some letting employees earn greater rewards by achieving their well-being goals.

You can also offer other employee benefits, such as help with childcare costs or travel expenses.

Provide employee health insurance

Health insurance benefits can support employees' financial well-being in various ways. Policies provide quick access to medical care, reducing absenteeism and lessening the impact on your company and employees. As mentioned, most policies include a rewards scheme that can help your staff save money.

Your team can also access mental health support via counselling, telephone helplines or care to reduce stress and treat symptoms of mental health conditions.

Employee Assistance Programmes (EAPs)

An Employee Assistance Programme (EAP) is a third-party service providing confidential counselling, meaning your employees can discuss their money worries privately. Most services also include legal and financial helplines providing general financial well-being advice. They can also signpost callers to other sources of support if they need one-to-one advice. An EAP can be a standalone service or provided as part of your company's health insurance.

Signpost employees to other sources of support

We've mentioned that an EAP can signpost your team to financial guidance, but you can also provide resources via the intranet or employee handbook. The information can help your team seek help without discussing their financial problems with you.

These could include information on ways to find a financial advisor to improve their financial well-being. The NHS's Every Mind Matters website provides information on dealing with life's challenges, including financial stress.

Several UK charities, including National Debtline, StepChange Debt Charity, and Citizens Advice, support people in financial difficulty. Mental health charity Mind has resources on financial well-being for employers, including a toolkit to help you support your staff.

Include financial health in employee well-being initiatives

When you think about employee well-being and develop workplace wellness initiatives, you likely focus on their health. However, education on financial well-being can also positively impact your team's mental and physical health.

Financial education sessions help improve financial literacy and empower employees to manage their finances effectively. They can also offer an opportunity to remind staff what's available via employee benefits and highlight the importance of making full use of these.

Globacare's specialist brokers help you find insurance products to support your team during financial stress or help them save money on their regular expenses. Contact us for tailored advice.