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.
- Pay off debt
Review and consolidate loans to help get them under control. Pay off your credit card debt and remember to start with the credit card with the highest interest rate. Be aware of “Pay Wave” as it is easy to spend and not think about it. Many places charge a % each time you “Pay Wave”, so every coffee maybe costing you more than you realise! Read more on this topic, here, in an article from our Financial Coaching partner, IMFG.
- Review fees
It’s important to review your bank and bank products regularly or as your life circumstances change. Compare bank fees and ensure you have the best products for your situation. Online comparison tools can be useful and as with mobile phone plans, you may find your bank can actually do better if you ask.
- Save for a rainy day
Saving is a proactive way to give you a sense of control and having an emergency or ‘rainy day’ fund can help alleviate financial stress knowing you have something in reserve. Start putting money away every month – even if it’s just a small amount, it all adds up. Set up an automatic debit so you don't have to think about it.
- De-stress
Start small with these steps, as this will give you a growing sense of control. Avoidance is a huge stressor. If you have taken the steps above, you are actively working to improve your situation and although it’s normal to feel worried or anxious when times are hard, know you are doing something. If your goals are more specific or involve future planning, start by getting advice or writing out your questions to help you focus on what you need to find out. Take time to relax and de-stress. The link between stress and physical illness is well documented so it’s important to prioritise your health and seek help when needed.
If you are feeling stressed or overwhelmed by your financial situation, remember you are not alone. Financial coaching can help you understand and manage money by teaching you financial skills that last a lifetime. AccessEAP’s financial coaches will assist you in creating a personalised action plan to manage your debt and provide practical information on your options and rights. Confidential guidance and support, is available, to expertly and respectfully guide you back to financial control.
- HR Metrics, Statistics and Trends White Paper, Subscribe HR White Paper 2018
- https://www.abc.net.au/news/2018-07-04/1-in-6-credit-card-users-struggle-under-mountain-of-debt/9936826