Rising energy prices, soaring inflation, reports of an upcoming recession and uncertainty about the future are causing unprecedented financial stress for employees. That’s evident from both statistics and from consultations carried out by the OpenUp psychologists.
In this article, we will talk you through the scale of this issue and explain how you, as an HR professional, can offer the best possible support to employees struggling with financial stress.
Financial stress is one of the most significant mental health challenges
Mental health and financial problems are often closely connected. One in six UK households (4.4 million) is now in serious financial difficulties and the vast majority is worried about their ability to meet their bills. Research shows that in England alone over 1.5 million people are experiencing both financial struggles and mental health problems. Over 86% of respondents claimed that their financial situation had made their mental health difficulties worse.
Financial problems affect all aspects of our lives. In worst-case scenarios, they stop us from being able to meet our basic physical needs – eating, drinking, clothing, shelter, etc. They also affect our social lives, our workouts and recreational activities, holidays and weekends away, as well as self-development activities (such as courses and education), as all of these things often cost money.
In addition, financial stress has an impact on our self-esteem. All in all, financial stress creates an enormous amount of pressure.
Why it’s important to support employees struggling with financial stress
Financial stress is one of the most prevalent forms of stress in the world. Money worries can lead to disturbed sleep, lack of motivation, dodging telephone calls and social interaction, and even physical pain.
Employees will bring all of this into the workplace. This means that financial stress has a direct impact on the productivity and work performance of your employees. Various studies reveal the following:
- 15% of all employees say financial stress impacts their productivity
- Financial pressure is the top cause of stress outside of work (34%)
- Higher levels of financial stress can also result in higher absenteeism: employees in high financial stress groups averaged 6.2 days lost vs 3.8 days in a low financial stress group
- Younger employees are twice as likely to be affected by financial stress than older colleagues (35% of 25–34-year-olds vs 17% of 45-54-year-olds)
- Employees with financial stress often have poor relationships with their colleagues
- Employees with financial concerns are twice as likely to go looking for a new job
This means that offering assistance with money problems and financial stress isn’t just nice for your employees, it’s also essential for your organisation. You’ll often see a quick return on investments in the financial health of your employees.
Who is struggling with financial stress?
According to a survey analysed by Bristol’s academics, the number of single parents in serious financial difficulties has increased from 23% to 37%. Among other groups particularly affected are social renters, private renters, and households with two children (with at least a ten per cent increase). A further 20% (5.7 million) are in financial difficulty on top of the 4.4 million who are experiencing serious financial difficulties. Consequently, over 10 million households in the UK face significant financial issues (either in serious financial difficulties or somehow struggling).
Champion’s employee wellbeing statistics also show that female employees are 33% more likely than male employees to experience financial stress. This finding is likely due to a variety of factors, but it reinforces results that indicate a significant financial well-being gap between male and female employees.
How can we recognize symptoms of financial stress in employees?
Financial stress isn’t always easy to recognize. There’s often a sense of shame surrounding financial problems, which makes employees reluctant to talk about them. What’s more, signs of financial stress could easily be mistaken for general stress, burnout or (mild) depression. Here are some possible symptoms:
- Problems concentrating
- Taking more time off sick
- Not taking part in social activities
- Tiredness and sleeplessness
- Anger and irritability
- Weight loss or weight gain
In some cases, signs are more clearly money-related, but in these instances, the money problems and stress are usually more advanced. Here are some examples:
- Not contributing to colleague’s gift collections
- Borrowing money from colleagues
- Asking for an advance on their salary
- Receiving calls from debt collectors or bailiffs
- Having their wages garnished
Managers, team leaders and administrators will often spot these signs sooner than you will as an HR professional. Ask them to notify you if they notice any of the above.
Even with these measures in place, it can still be hard to recognize the signs. The Money and Mental health policy institute offers many resources, practical tips and data on identifying and managing money concerns and improving financial and emotional well-being.
What can you do to prevent financial stress?
Money problems and financial stress are two different things: someone who is struggling to make ends meet has money problems. Financial stress is the result of money problems or anxiety related to them.
In order to avoid money problems (and financial stress as a result), it’s best to tackle the root of these issues: in other words, to stop people from running out of money and getting into debt. You can do this in the following ways:
- Money problems occur when a person’s outgoings exceed their income. This means that, as an organisation, you need to offer salaries that allow employees to make a decent living. It might be time to review this within your organisation. Although average wages rose 4.7% between April and June, that was strongly outpaced by inflation, which has risen to 9.4% in June and is expected to exceed 13% by October. Therefore, new policies are needed to ensure that wages catch up with headline inflation, especially to keep workers from suffering economic hardship.
- Always pay salaries on time. For some employees, having to wait an extra day to receive their salary might be massively stressful. If payday falls on a weekend, then make sure people know well in advance whether you’ll be paying them on the Friday before or the Monday afterwards. This way everyone can plan accordingly.
- Major life events often cause financial problems. Whether it’s having a child, getting divorced, the death of a partner, or caring for a loved one. During events like this, offer employees the chance to speak to a budget coach or financial advisor.
- Offer a financial health check to all employees. This way, they can figure out early on if they’re setting aside enough money, if they’re properly insured and if there are any unnecessary expenses they can cut. For example, you could do this through the Budget Planner offered by MoneyHelper. There are also various international banks that offer financial health checks.
- Each year, organize a workshop on financial matters, including education on things like pensions, savings and investments, budgeting, and bookkeeping.
To prevent or cure financial stress, you can do the following:
- Provide employees with access to OpenUp psychologists. Preventing stress is one of our fortes. Since our psychologists are so easy to reach – anonymously and without any restrictions – through online chats and video calls, we can usually help most employees before they develop serious symptoms. For example, our psychologists will help your employees to map out their income and expenses before seeing if their income can be increased (for example by applying for social support) and their expenses reduced. Meanwhile, they’ll work through the symptoms of stress.
- Break down the taboo around money worries by discussing them regularly. You can do this when hiring new employees and during feedback and performance reviews. Also, remind team leaders annually to tell employees about the help that’s available if they run into financial difficulties.
- Set a good example yourself and encourage managers and team leaders to do the same. Be open with employees about any financial concerns you’re experiencing or use figures and stories to illustrate that money stress is very common. This will help to eliminate the shame that employees dealing with money stress experience.
Now that the UK government has outlined its energy price guarantee plan, which will limit household energy bills to £2,500 annually for the next two years, some of the financial pressure will have eased for your employees. However, inflation, high costs of living and uncertainty about the future are still major causes of stress that you shouldn’t underestimate.
Would you like to discuss how OpenUp can help reduce money concerns for your employees? 👉 Then get in touch with us.