Money cannot buy happiness but it can take a toll on employees’ overall wellness. Financial worries can lead to depression, anxiety, sleepless nights, and troubled relationships regardless of income level. Contrary to popular belief, income is not an indicator of financial health. A high income does not necessarily equal high savings. Financial wellness is dependent on how well money is managed, one’s saving and spending habits.
Based on our research of 10,484 US employees, we found that 40% of people making $100,000+ annually have less than three months of savings. There are many consequences to poor financial health including a link between financial wellness and personal relationships. Those who struggle financially typically experience a strain on their relationships with friends, family, spouses, and coworkers. Those who thrive financially typically thrive within their relationships.
Poor financial wellness is a major source of stress for nearly half of US employees. This stress prevents employees from living the life they want. Employees with financial worries are 3.4 times more likely to have troubled relationships at home. They tend to distance themselves from friends and family because they don’t have the money to spend on life’s little luxuries without feeling guilty. These luxuries might include a family vacation or taking the kids to an amusement park. They are also more likely to decline invitations for an evening out or social gatherings that require money. In turn, conflicts arise within their relationships.
Romantic relationships are also burdened by the pressures of financial stress. Employees sometimes feel the need to hide their financial worries from their partners and/or put their financial worries onto their partners. Either situation can ultimately hurt the relationship by putting a strain on both parties.
In the workplace, financial worries cause tension between employees when they compare income. Our research showed that employees with money worries are 4.3 times more likely to have poor relationships with colleagues. They become unmotivated, unhappy, and struggle to complete daily tasks. We found that employees with financial worries are 2.2 times more likely to seek a new job opportunity with the hope that it will improve their financial situation. In the end, this creates a considerable cost for employers. We estimate the average employer is losing the equivalent of 11-14% of the total payroll expense to poor financial wellness.
How to Improve Financial Wellness
As you may have guessed by now, a rise in income isn’t enough to solve money worries. The solution starts with financial education. A healthy financial habit is to save first and then spend later. Those that spend first and save what is left over, will find it difficult/ impossible to save. Habits are extremely difficult to change and that is why people find it difficult to improve their financial situation. Salary-linked solutions can help change habits. Salary Finance partners with employers to offer financial wellness benefits that help employees improve their lives by improving their finances. Employers and employees can utilize our resources to improve financial stress and boost productivity.
Want more information? Download your copy of the Employer’s Guide to Financial Wellness to further understand the impact poor financial health has on employees.