Debbie Hancock: Financial stress and the workplace – strategies for supporting employee wellbeing 

In today’s economic climate, financial stress is becoming a bigger issue for employees and employers. With the pandemic and then the rise in the cost of living, this has placed immense pressure on individuals and their families. This financial strain can have a detrimental impact on employee stress levels, their mental and physical health and consequently, their performance at work. 

As leaders, it is essential to recognise the significant impact that financial stress can have on employee wellbeing and performance. Beyond providing financial resources, creating a positive money mindset among your team can create a more supportive and resilient work environment.

Understanding the Impact

With over 37%* of employees saying that financial worries are their top stressor outside of work, it’s clear that money stress can negatively affect your business. This rises to 45% when you look at employees aged between 25 and 34. Developing a financial wellbeing policy and culture of openness can help support your employees through tricky times and beyond, leading them to feel more secure, positive and happier at work.

According to the Government’s Money and Pensions service** 11.5m people have less than £100 in savings and 22m say they don’t know enough to plan for retirement. Imagine the stress this is causing.

The service also found that people who experience mental health issues are particularly susceptible to experiencing financial difficulties and people in financial difficulties often also experience challenges with their mental health.

Financial stress can lead to a range of issues that can negatively affect workplace performance, including:

• Decreased concentration: Difficulty focusing on work tasks due to financial worries.
• Reduced productivity: Lower motivation and engagement resulting from financial stress.
• Increased absenteeism: Time off work to address financial matters or due to stress-related health issues.
• Difficulty managing emotions: Emotional instability caused by financial pressure, making it challenging to navigate workplace challenges.
• Shortened attention span: Difficulty staying focused on tasks due to constant financial concerns.
• Resistance to change: Financial stress can make employees less open to new tasks or criticism.

The Growing Need for Support

The Money and Pensions Service reported a surge in demand (34%) for online money help in the first week of 2024, with the most popular topics being debt advice and support with the cost of living. This highlights the increasing need for financial support among employees.

The Long-Term Impact of Financial Decisions

The financial decisions employees make today can significantly impact their future financial security. Whether it’s saving for a house, building an emergency fund, or planning for retirement. The choices made now can have a positive or negative long-term impact.

Financial Wellbeing Defined

Financial wellbeing is about employees feeling secure and in control of their finances. It involves having the confidence to manage money and make informed decisions that help them to achieve their financial goals. This includes being able to pay bills, handle unexpected expenses and plan for a healthy financial future.

The Power of Money Mindset

Our money mindset, consisting of our beliefs, attitudes and behaviours towards money, significantly influences our financial behaviour and overall wellbeing. A negative money mindset, characterised by scarcity beliefs, fear of financial insecurity and limiting self-beliefs can contribute to heightened financial stress. In contrast, a positive money mindset, characterised by abundance beliefs, financial empowerment, and a growth mindset can help individuals manage financial challenges more effectively and reduce stress.

Money mindset is often deeply rooted and can be influenced by factors such as family upbringing, cultural beliefs and personal experiences. Understanding these influences can help individuals unlearn negative money habits and develop a more positive financial outlook.

Cultivating a Positive Money Mindset

Creating a positive money mindset involves:

• Taking control of financial decisions: Making informed choices about spending, saving, investing and retirement.
• Celebrating those wins: Recognising and appreciating financial progress, no matter how small. This can help reinforce positive behaviours and boost motivation.
• Maintaining motivation: Understanding that financial situations can fluctuate and staying committed to positive financial habits.
• Examining beliefs and values: Identifying and addressing any negative patterns or beliefs that may be hindering financial progress.
• Shifting perspective: Becoming aware of current beliefs and attitudes towards money and making conscious choices about whether to maintain or change them.

By cultivating a positive money mindset, individuals can improve their financial well-being, reduce stress and enhance their overall quality of life.

Overcoming Limiting Beliefs

Creating the right environment for employees to explore their money mindset allows them to become aware of what is currently supporting and not supporting them, enabling them to make informed decisions.

Individuals can:

• Become aware of limiting beliefs: Recognise negative thought patterns and their impact on financial decisions.
• Challenge limiting beliefs: Question the validity of negative beliefs and seek evidence that supports a different perspective.
• Take action: Implement positive changes in financial behaviour based on new insights.

Cultivating a positive money mindset can lead to numerous benefits for both employees and organisations, including:

• Improved employee wellbeing: Reduced stress, increased job satisfaction and better overall mental health.
• Enhanced productivity: A positive mindset can lead to increased focus, motivation and problem-solving abilities.
• Stronger team culture: A supportive and understanding environment can foster a sense of belonging and camaraderie.
• Reduced turnover: Employees who feel valued and supported are less likely to seek employment elsewhere.
• Improved morale and job satisfaction: Employees who feel financially secure are more likely to be satisfied with their jobs.

Supporting Employee Wellbeing

To foster a positive money mindset and provide practical advice, organisations can implement a range of strategies to support their employees’ wellbeing, including:

1. Financial Education: Provide access to financial education resources, such as workshops, webinars or online tools. This could include budgeting, debt management, money mindset awareness and savings strategies. Equip employees with the knowledge and skills they need to make informed about their money and reduce financial anxiety.
2. Free Impartial Advice: Point employees to free impartial advice websites like Money and Pensions Service, Citizens Advice Bureau, Money Helper, Pension Wise or National Debt Line.
3. Financial Coaching: Consider offering financial coaching services to employees who may benefit from personalised guidance and support to help employees to cope with financial stress.
4. Flexible Working Arrangements: Allow employees to have more control over their work schedules to balance financial responsibilities.
5. Open Communication: Encourage open and honest conversations about financial concerns.
6. Benefits and Perks: Review and adjust benefits to ensure they align with employees’ financial needs.
7. Job Security: Provide reassurance of job security where appropriate, as financial concerns can be exacerbated by job insecurity.
8. Consider cultural differences: Ensure that your strategies are culturally sensitive and applicable to employees from diverse backgrounds.

Helping Employees Leading up to the Holiday Season

The holiday season can be particularly stressful financially for many people. Organisations can take steps to support their employees during this time by:

• Offering budgeting workshops: Providing employees with guidance on creating and sticking to a holiday budget, which can help reduce financial anxiety.
• Considering payroll advancements (where appropriate): In some cases, offering one-time, low-interest payroll advancements can provide a temporary financial lifeline for employees in need.
• Employee recognition programs: Recognising and appreciating employees’ contributions during this stressful time can boost morale and create a positive work environment.

By prioritising the development of a positive money mindset alongside practical advice, organisations can create a more supportive, resilient and productive work environment. By providing the necessary resources, encouragement and support, you can empower your employees to achieve their financial goals and live more fulfilling lives, reducing the risk of them seeking employment elsewhere.

References:

*Champion Health Survey: https://championhealth.co.uk/insights/financial-wellbeing-statistics/

**Money and Pensions Service: https://maps.org.uk/en#