Financial wellness is a key component of every employee’s overall wellbeing and can have a big impact on mental health. Individuals struggling financially are more likely to experience mental health issues that can detract from meeting work responsibilities. With inflation leading to interest rate hikes and rising food prices, South Africans continue to face financially stressful situations which can have a significant impact on their mental health. What can organisations do to assist with employee financial wellness?
What is financial wellness?
Financial wellness is the state in which a person can fully meet their financial needs without pressure, both now and in the future. For an individual to achieve a state of financial wellness, it is important for them to be financially literate. For example, being able to set up and use a household budget or understanding the importance of investing money for retirement, and knowing to consult a professional when doing so.
“For an individual to achieve a state of financial wellness, it is important for them to be financially literate.”
How do financial issues affect emotional wellbeing?
Studies, such as DebtSafe 2022 South African Consumers’ Financial Reality Survey, have found that employees who are struggling with financial worries have at least one sign of poor mental health that affects them at work. This includes:
- Loss of sleep
- Poor concentration
- Reduced motivation
This survey revealed that out of 1400+ participants, more than 1300 respondents said that financial stress had an impact on their stress levels (52%), sleep patterns (28%), overall health (26%), decision-making abilities (19%) and relationships (14%).
Research cited by Money and Mental Health Policy Institute in England, on health and wellbeing demonstrates a clear link between finances and emotional wellbeing as follows:
- Financial difficulties are a common cause of stress, and perceived stigma around debt can mean that people struggle to ask for help and can become isolated.
- Financial difficulty drastically reduces recovery rates for common mental health conditions. People with depression and problem debt are 4.2 times more likely to still have depression 18 months later, compared to people without financial difficulty.
- There is a strong link between problem debt and suicide. People in problem debt are three times as likely to have thought about suicide in the past year.
How do organisations support employees’ financial wellness?
While employers may dismiss employees’ finances as a personal matter, the stress associated with financial strain can significantly impact productivity. Forward-thinking employers offer benefits like health and wellness programmes because they understand the importance of their employees’ holistic mental health. A strong financial wellness strategy should be part of a wider holistic approach to employee wellbeing.
- Offering financial wellness programmes. Organisations can create financial wellness programmes that give employees the tools and knowledge they need to manage their money, pay off debt and save for the future. Providing workers with the resources they need to change their behaviour and manage their finances can help them feel more in control and less stressed.
- The role of EAPs in supporting financial wellness. Employee Assistance Programmes (EAPs) offer employees short-term, confidential counselling services, referrals and follow-up services for employees in need. When it comes to financial issues, EAPs can provide anonymous and confidential support to employees with financial issues, hopefully before these begin to seriously impact on their mental health. And, they can refer employees on to properly equipped professionals for expert financial counselling or to receive professional financial planning advice.
“There may be a need for greater assistance that requires options for employees to have ongoing access to a Money Coach or a Certified Financial Planner (CFP)”
How might specific financial counselling services work?
An initial call with a financial counsellor can be performed in a 30 to 60-minute call that addresses an employee’s financial priorities and offers education. However, should an EAP benefit only allow for one call, it can be difficult to help employees who have multiple or complex financial issues. There may be a need for greater assistance that requires options for employees to have ongoing access to a Money Coach or a Certified Financial Planner (CFP). A personal Money Coach can provide ongoing accountability and support for both challenge and goal-oriented financial habits and behaviour. A CPF can provide financial planning advice to individuals, which includes help with investing, retirement planning, estate planning, and tax law.
Who can a financial counselling service help?
Employees who find themselves in financial difficulty can include:
- Families – where the breadwinner has been retrenched or a partner is out of work.
- Divorcing individuals – because of the need for support and guidance with thoughts, feelings and attitudes while negotiating financial settlements, as well as learning new financial roles.
- Widows/Widowers – overwhelmed by grief and finding it a challenge to cope with financial issues, maybe for the first time.
- Abused individuals – may be staying in the abusive relationship because of lack of financial resources or lack of knowledge.
- New parents – may be unprepared for financial stress that accompanies the arrival of a new baby.
- Single parents – may struggle to maintain work/home balance with financial security being a high priority.
- New college graduates – may be overwhelmed by student debt, both emotionally as well as financially, and find themselves in circumstances they never anticipated.