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Guest Post: The Correlation Between Financial Wellness and Health

January 20, 2021 / Employee Wellbeing Best Practices

Written By: Kris Alban

Financial wellbeing has become an increasingly critical component of employee wellbeing. In fact, according to Virgin Pulse’s latest member survey, of the 73,199 respondents who reported increased financial concerns in 2020, 79% felt more stressed, 52% had difficulty focusing at work and 47% experienced a decrease in sleep quality and quantity. These findings demonstrate just how critical financial stability is to one’s health, wellbeing and work performance. Integrating financial wellness tools and resources into an employee’s overall wellbeing program and experience will help ensure easy access to and utilization of those benefits.

With the heightened focus on this urgent topic, we’ve asked Enrich, one of Virgin Pulse’s VP+ Partners, to provide their perspective on how financial wellbeing impacts health.

Kris Alban, Executive Vice President of Enrich:

Financial wellness has a direct connection with health. Several studies have demonstrated this correlation, and stress is at the root of this interrelation.

Without a doubt, U.S. employees are feeling stress, and national data tells us that most stress is centered on finances.

The National Endowment for Financial Education (NEFE)[1] found that 79% of American adults feel financial stress, with the two biggest factors for eliminating this stress being the ability to save money (54%) and the ability to manage debt (46%).

Additionally, a Northwestern Mutual study[2] found that healthcare costs, financial emergencies and planning for retirement also cause financial stress levels to rise.

Unfortunately, your employees have reason to feel stressed:

  • In 2019, nearly three-quarters of Americans experienced some kind of financial setback, and this number is likely to be higher in 2020
  • 29% of Americans would have to put an unexpected expense on a credit card
  • 69% of Americans have less than $1000 in savings[3]
  • 59% of Americans do not know how much they will need to retire[4]

Financial stress impacts the health of employees, affecting not only the employee and their family, but also your company’s bottom line.

Impact on Health

The human body is not very good at handling prolonged stress, like consistent financial worries. According to The Mayo Clinic[5], the list of health issues due to stress is long and includes:

  • Anxiety
  • Depression
  • Diabetes
  • Digestive issues
  • Fatigue
  • Headaches
  • Heart disease
  • High blood pressure
  • Lowered Immunity to things like the flu or common cold
  • Obesity
  • Sleeplessness

Additionally, those who are not coping well with stress often participate in unhealthy habits[6] such as a poor diet, smoking, taking drugs or drinking excessively. To make matters even worse, financially stressed individuals often put their healthcare needs on hold[7] because of cost.

Employee Financial Stress Affects Your Bottom Line

With so many financially stressed employees, your company deals daily with the fallout. Mental and physical health concerns show up at work as:

  • Absenteeism[8]
  • Presenteeism
  • High turnover
  • Poor interpersonal relationship issues
  • Poor work quality
  • Higher healthcare costs (up to 50 percent higher for stressed employees)[9]
  • More on-the-job accidents[10]

These issues, along with the lack of participation in employer-sponsored retirement accounts, cost businesses about $500 billion per year[11], or just under $3,000 per employee.

As organizations understand the impact of financial stress on employee health and organizational health, finding a solution becomes a high priority.

Creating a Holistic Wellbeing Benefit

Solutions should be holistic in nature, touching on all aspects of an employee’s wellbeing. The benefits most wanted by employees[12] range from help with student loans to flexible healthcare benefits to mindfulness training and everything in between.

Wellbeing is no longer just about blood pressure or smoking cessation, and the right benefits package must focus on more than a narrow band of employee health, instead encompassing the variety of issues that affect employees.

Because the link between financial stress and health is so strong, adding a financial wellness component makes sense. Usage of a holistic financial wellness program over time has been linked with lower financial stress levels.

With a financial wellness program created specifically for your employees and their needs, employees can lessen their financial stress by learning the right financial management skills and behaviors, such as understanding their financial personality profile, developing a budget, creating a savings plan, getting debt under control and understanding employer-sponsored retirement benefits.

The 2019 PWC Employee Financial Wellness Survey[13] found that employees are using the financial benefits offered to them and getting the desired results. Nearly half of participants got help preparing for retirement, and almost a third got their spending under control, paid off debt, and saved for major goals, thus alleviating the things that cause them the most financial stress.

When evaluating health solutions for employees, look beyond traditional health benefits by considering all aspects of your workforce’s wellbeing. Doing so will bring about the greatest results.

With a seamless solution like VP+, featuring app-integrated partners in all areas of wellbeing, organizations can work to prioritize holistic wellbeing for your entire workforce, wherever they may be. Request a demo today.

 

[1] https://www.nefe.org/news/polls/2020/survey-majority-of-americans-hone-financial-focus.aspx#:~:text=Over percent20three percent20quarters percent20(79 percent20percent,provide percent20the percent20most percent20financial percent20relief.
[2] https://news.northwesternmutual.com/planning-and-progress-2018
[3] https://www.gobankingrates.com/saving-money/savings-advice/americans-have-less-than-1000-in-savings/
[4] https://www.usfinancialcapability.org/downloads/NFCS_2018_Report_Natl_Findings.pdf
[5] https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/stress-symptoms/art-20050987
[6] https://www.apa.org/news/press/releases/stress/2014/stress-report.pdf
[7] https://www.ncbi.nlm.nih.gov/pubmed/25633356
[8] https://www.pwc.com/us/en/industries/private-company-services/images/pwc-8th-annual-employee-financial-wellness-survey-2019-results.pdf
[9] https://www.nihcr.org/analysis/improving-care-delivery/prevention-improving-health/employer-wellness-initiatives/
[10] https://www.bls.gov/news.release/osh.nr0.htm
[11] https://www.salaryfinance.com/us/financial-wellness-guide-2019/?zd_source=hrt&zd_campaign=4321&zd_term=danmacklin
[12] https://www.benefitnews.com/list/experts-predict-2020s-most-in-demand-benefits
[13] https://www.pwc.com/us/en/industries/private-company-services/images/pwc-8th-annual-employee-financial-wellness-survey-2019-results.pdf

About The Author

Kris Alban is executive vice president of iGrad, a San Diego-based financial technology company that provides artificial intelligence-powered financial wellness solutions to employers, financial institutions, colleges and universities. Its Enrich Financial Wellness platform is used by more than 20,000 employers and more than 300 financial institutions.

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