How to combat financial stress during inflation and other economic stressors

Earlier this year, U.S. inflation hit a 40-year high, as prices for everyday expenses soared. Today, 17% of Americans mention the high cost of living and inflation, and 4% mention fuel prices, as the most important problem facing the U.S. What’s more, U.S. employees are now feeling concerned about losing the value of their savings due to inflation and other market forces, underscoring the importance of supporting employee financial wellness during this time. According to MetLife’s 2022 Employee Benefit Trends Study, financial wellness is the aspect of health that employees are most concerned about, when compared to physical, mental and social wellness.

To help alleviate employee financial concerns, employers may want to consider ways to help improve employee financial wellness, especially considering the impact it can have on other areas of an employee’s life. Indeed, MetLife’s study found that 86% of employees that are mentally and financially healthy are productive, compared to just 55% of those who are not.

Likewise, the majority of employers agree that employees are less productive at work when they are worried about personal financial problems. This could be one reason behind the fact that, according to the study, 81% of employers now believe they have a responsibility for the financial well-being of their employees – up from 70% in 2021 and 69% in 2020. The connection between financial and mental health and productivity demonstrates the positive impact that implementing tools and resources that support employee financial health programs can have while also fostering a workplace that is better for everyone.

Here are three easy ways to bolster employee financial wellness:

Provide financial guidance and education: On the heels of Financial Literacy Month, a month dedicated to raising awareness about financial literacy and promoting financial education, employers should seek ways to assist in improving both. Indeed, when employees were asked about their top needs to be financially healthy, 47% say they needed more personalized financial guidance and more education around financial benefits. Although employer action to help with employee financial health has increased in recent years, employees are still seeking ways to improve their financial well-being such as completing a financial plan, engaging in discussions with a financial planner and utilizing a financial wellness app. While some employees are proactively taking steps to promote their financial wellness, about a quarter of employees have not done anything to achieve their financial goals – a gap that demonstrates an opportunity for employers to provide more support surrounding employee financial health.

Understand the impact of financial stress: Financial stress has long been associated with poor mental health. Today, the top five self-reported causes of poor financial health include increased cost of everyday living, not having enough money saved to retire, not being paid enough for the work they do, having debt and lacking an emergency fund. Beyond these concerns, 64% of employees reported having to dip into their savings or take out loans to pay for something such as vehicle purchases, monthly bills, unplanned general expenses, debt repayment, home purchases and medical bills. To help combat these underlying causes of financial stress, and in turn support employee mental health, employers should consider offering financial planning and wellness tools. According to MetLife’s research, these financial wellness resources, which can help employees with money-management, have increased 27 percentage points in employee interest over the last five years.

Support short- and long-term goals: While short-term financial goals can help cover day-to-day expenses, such as rent, an emergency fund or travel, long-term financial goals can help individuals save for larger expenses, such as a mortgage, a child’s college savings and retirement. Unfortunately, many employees, including young working parents, are concerned about short-term expenses, as 53% of Gen Z and 54% of millennials report living paycheck to paycheck. Beyond short-term expenses, a financial concern that stems across the entire employee population, and particularly with millennials, relates to retirement challenges – with 57% of employees reporting concern about outliving their retirement savings.

Employee financial wellness should be a priority for employers, especially considering the impact it can have on other areas of an employee’s life. Against the backdrop of the “Great Reshuffle,” benefits are increasingly becoming differentiating factors for employees as they look to stay with their company or decide to find a new one. For employers looking to retain and attract new employees, especially amid inflation and other market concerns, providing employees with the right financial resources could be one solution. Moreover, employers who can offer their employees solutions and tools that support financial education, help combat causes of financial stress and implement smart money habits, will be well positioned to support their employees’ overall financial health.

Meredith Ryan Reid is Senior Vice President, Financial Wellness & Engagement at MetLife. MetLife’s financial tool Upwise, is a new mobile app that recognizes the emotional connection to finances and provides tangible actions to help build positive habits. Upwise can help individuals integrate smart money habits into their everyday routines. These can help individuals set good financial habits that help them reach their short- and long-term goals. Upwise is available at no cost to all individuals and regardless of any MetLife relationship or product.

Each individual’s legal, tax, and financial situation is unique; therefore, each individual is advised to consult with their own attorney, accountant, and financial professional regarding their specific circumstances. MetLife does not provide legal, tax, or investment recommendations or advice.