It may not be surprising that a recent HR study found 80% of the top five health concerns for employees are mental health related, 41% admit to being distracted at work because of financial worries (presenteeism), 31% of employees say they have taken unexpected time off to deal with a financial issues (absenteeism).1 The 2018 Australian Securities and Investments Commission (ASIC) report showed 18.5 per cent of consumers were overwhelmed by their credit card debt load with outstanding balances now totalling $45 billion.2 We learn to live with underlying stress around our finances but these statistics show that the impact on both life and work can be significant. What can we do individually and as employers to take positive financial steps without becoming overwhelmed?
Resilience is the ability to recover and bounce back from adversity and life’s challenges. When applied to finances it is the ability to withstand external pressures during times of financial stress. Employees must understand that these external pressures are often outside their control and in order to be resilient it means taking responsibility and having a plan in place to feel confident about their financial standing.
Employers can play a role in helping their employees cope with financial related stress by recognising the impact it can have on individuals as they move through different life stages. It is important to recognise that there are many varied reasons for financial stress. For example, our ageing workforce is facing many challenges, including their fear of entering retirement, paying for their children’s higher education and moving their parents into nursing homes. These life events can be both mentally and physically draining as they involve the security and happiness of the people we care most about. On the other hand, millennials are facing economic instability, crushing student debt, stagnant wages and looming uncertainty about the future. Employers can assist by providing information around financial literacy as many people struggle to understand their finances and are unsure of ways to seek information. Financial knowledge and understanding is often the first very important step in this process.
How individual employees handle financial stress varies greatly. Breaking down and understanding the underlying issues can be the key to helping employees become more resilient. Here are some basic tips on reducing finance-related stress:
- Learn to budget
Creating a budget gives you clarity and a tangible place to start in terms of understanding where your money is going and how you can reduce spending. If your financial situation is causing you stress, it’s vital to create a budget. Record all income and expenses. Start by being critical of what you are spending and cut down on any unessential items if possible. See the article in this month’s newsletter for budgeting tools.