- March 7, 2018
- Posted by: Seedofpro
- Category: Corporate Wellness, Debt restruction, Employee wellness, Finance & accounting, Financial litteracy, Financial wellness, Midiation
When it comes to financial stress in the workplace, my advice is that ‘Prevention is better than cure’.
This was a term I never really understood when as a child my dentist used to threaten me with it, but I am starting to get it now. Often stopping a problem before it comes to pass is far better than dealing with the repercussions of letting it happen.
Financial Stress is no different.
Financial Stress is a real-life condition that occurs on the back of an unwanted financial event or circumstance which causes an employee significant stress or anxiety.
So surely it makes a lot more sense to prevent employee financial stress at source as opposed to trying to deal with the fallout when the horse has bolted. In this article, I’m therefore going to look at employee financial stress prevention solutions.
Before doing so let’s take a quick look at the employee financial wellness scale.
Employee Financial Wellness Scale
As the picture above shows, financial wellness and financial stress are at the opposite ends of the scale to one another.
Financial wellness equates with serenity and peacefulness in the employee’s financial world where every possible financial event is planned for. Even when the most unexpected of scenarios occur, financially once an employee has planned for it, they should be ok. The financial stress will have been avoided.
On the other end of the financial wellness scale is distress and panic every time even the smallest of financial hiccups occurs. An employee who has no financial provision for the unexpected is far more likely to experience financial stress.
So, what is the solution to financial stress? Well, clearly in this case prevention is better than cure.
Employee financial planning
We know that unexpected events will happen so the role of a financial planner is to construct a scenario based plan that covers the various possible future events in an employee’s life.
It’s crucial these plans are individualised. Each employee is different and has different circumstances and employee life-cycles that need to be catered for. Some are married, some have kids, some have safe jobs, some have significant debt levels, some have medical issues and so on. Hence, it’s crucial that each employee has their own financial situation looked at.
For the purposes of this article let me highlight some of the causes of financial stress and some of the employee financial wellness solutions that might help fix these future issues.
1. An employee can’t afford a holiday, car repairs or unexpected immediate costs.
Each of us should work towards building up an emergency fund. This fund should be easily accessed and should be between 3 – 6 months of your after-tax salary. Readily available cash ensures that an employee doesn’t experience any difficulty financially when the unexpected short-term cost show up.
Employee Financial Wellness Solution: Educate employees on emergency fund savings. Provide support for planning monthly savings to accrue this fund.
2. An employee’s kids start going to college.
An employee with kids approaching 3rd level will need to have planned for the associated costs. 4 years of college will cost tens of thousands of euro in Ireland. Any employee that arrives at this stage of their lives without any targeted savings will then have to attempt to support their kids with their monthly salaries. This will result in significant financial stress to the household which can be easily avoided.
My tip for family households is to start saving children’s allowance from the government monthly. If started soon enough, this will go a long way to removing this financial stress when it comes time to pay for college fees.
Employee Financial Wellness Solution: Make employees aware of ‘down the road’ financial circumstances that ought to be planned for now.
An employee can’t afford to retire.
Many employees use all of their disposable income in the here and now and live month to month or pay cheque to pay cheque. Considering that each of us will have careers that can run for 30-45 years we must also consider that we may be retired for 25 years or more.
A lot of money is needed to ensure that stress-free financial freedom is achieved in retirement. The state pension will help, but it simply isn’t enough to be comfortable. It’s crucially important that small sacrifices are made while an employee is working to ensure they have sufficient income in retirement to ensure a comfortable existence without financial worry.
Employee Financial Wellness Solution: Make retirement planning and pension advice a key part of employee financial wellness programmes.
My dentist was right!
Once a functioning targeted plan is in operation the chances that employees will experience financial stress reduce significantly. And we all know that when an employer helps reduce and eliminate potential life stresses that there will be knock-on improvements to an employee’s productivity and employer loyalty.
Its seems my dentist was on to something.[/vc_column_text][/vc_column][/vc_row]