With parts of the UK now deep into the second lockdown of 2020, we’re increasingly being advised to look after our mental health and emotional wellbeing, however financial wellbeing is a topic which is not as openly discussed but is equally of concern.
Financial wellbeing is the state of meeting all current and future financial obligations, being able to respond to financial unpredictability, and ultimately feeling financially secure enough to enjoy life.
Financial wellbeing is important as it impacts all other elements of life; we need financial wellbeing to do a job that we enjoy, make healthy food and lifestyle choices, take breaks to recharge, spend time with those we love, and make life decisions like starting a family or retiring.
Impact on Mental Health
Poor financial wellbeing has been linked to feelings of stress, anxiety, and depression. 25% of employees surveyed believe that financial stress has had a detrimental effect on their mental health and a 2017 Mental Health Foundation survey found that 28% of people in periods of unemployment reported negative mental health, compared to 13% of people in paid employment. Financial stress has also been continually linked to suicide and suicidal thoughts, with male suicides in the UK increasing around 1.4% with each 10% increase in unemployment during the recession. One-fifth of unemployed people have had suicidal thoughts and feelings in the last two weeks. Employees struggling with financial wellbeing also find themselves feeling burnt out and feel that their time is more scarce, a factor that may have contributed to an increase in frequent job switching in Millennials.
Almost half of all employees worry that they will be unable to retire due to poor financial health, and one in three loses sleep because of this.
Poor mental health caused by financial stress has also been linked to poor attitudes around work and low motivation, with 43% of employers believing that financial worries lower productivity, 31% believing it leads to absenteeism, and 22% believing it leads to high staff turnover. With these links between financial wellbeing and business productivity becoming more severe, employers are starting to look at more ways they can support staff that may be struggling.
With various restrictions and phases of lockdown in place across the UK and the furlough scheme extended to Spring 2021, financial worries and stresses are rife. UK unemployment has increased by 120.3% since March of this year, and it’s taken an unprecedented toll on mental health nationwide. The financial burden of caring for family and loved ones has also increased during the coronavirus pandemic, and with the country growing darker and colder with the arrival of winter, many people will find lockdown tougher on their mental health than it was during the summer months.
Financial worries often increase in the lead up to the festive period, with Black Friday, Cyber Monday, and the Christmas season applying pressure on us to overspend and indulge.
Some will feel the need to overcompensate with expensive gifts and food and drink to unite their family after being apart for the majority of the year or to treat loved ones who have experienced financial or emotional turbulence.
As the Covid-19 pandemic disproportionately affects certain members of society, so does financial hardship and unemployment. The UK’s lowest-paid workers have felt the effects of the coronavirus recession more than any other bracket; the Resolution Foundation found that 30% of those in the lowest income bracket have been affected by the pandemic’s damage to the labour market, compared with only 10% of those in the top fifth of earners. This financial uncertainty and stress takes its toll on mental health, with twice as many unemployed people feeling that they’re not coping well with the stress of the pandemic than people in employment. Additionally, this lack of access to employment opportunities has been linked with a decrease in quality of life, social status, and self-esteem.
A Role for Employers?
Over two-thirds of employees feel unsupported by their employer when it comes to financial wellbeing. Just 7% of employers stated that they felt confident speaking to their employees about financial issues they might be experiencing, and with many Brits feeling uncomfortable discussing money, feelings of financial stress can easily be bottled up and spiral out of control. Over half of employers worry about their employees’ financial health, yet many believe that they don’t have the resources to help. 23% do not offer any form of support, and this number only increases for smaller businesses with less staff. Many believe that getting involved in financial wellbeing is too costly and not the employer’s responsibility.
To improve financial wellbeing, businesses have to embrace open communication and education. First, it’s important tolet employees know that it’s ok to talk about money and financial worries. Support and leadership from business leaders is crucial, and senior management might consider sharing their own stories, worries, and advice to encourage others to do the same without fear of judgement. Only when open and honest communication is established can organisations begin to implement effective Employee Assistance Programs to support with financial problems. This could include access to financial support schemes to support the management of certain work expenses like travel or equipment, partnering with financial service providers to offer payroll savings schemes, or signposting other advice services where relevant.
Financial support like ISA/investment information and salary sacrifice loan options could also be offered through employee benefits programs, as well as comprehensive financial education and counselling resources. HR teams and people managers need to develop a good understanding of the causes and consequences of financial issues, as well as how to support employees who are struggling with financial wellbeing and its effect on mental health.
Financial wellbeing is already becoming a priority for organisations in the UK following the pandemic, as seen within
This approach helps to signpost employees of where to seek expertise, using education as a proactive and preventative step, and connecting staff with services that can provide more extensive support. Two-thirds of employees said receiving financial education at work would make them feel more looked after, with 23% feeling more loyal to their employer as a result. A workplace where employees can embrace open, shame-free conversations to enable them to access support to improve their wellbeing leads to better wellbeing, improved communication, boosted productivity and motivation.
At HappyMaven, we believe that good business starts with employee wellbeing, and holistic wellbeing encompasses diversity and inclusion, mental health and stress, financial, emotional and physical wellbeing too. When an employee is empowered and supported in the workplace, businesses will reap the rewards. Happier and more engaged employees make better decisions, have a deeper understanding of their customers, and ultimately lead to improved results to meet long-term business goals.