Employees’ top financial challenges: Recognizing their evolving needs is key

January is widely known as Financial Wellness Month. While the month has officially come and gone, it’s a reminder of the importance of taking care of our financial health as we do our physical, mental and spiritual well-being. As individuals start to take action on their goals for the year ahead, it’s equally important for companies to take a step back and think about how they can support their employees’ financial wellness beyond the month of January

As CEO of Addition Wealth, a financial wellness benefits company, I get to see firsthand the positive impact financial wellness has on individuals and their families. Research shows that people who are confident in their financial situations are happier, less stressed, and more productive at work. In a challenging economic climate for most employees, the companies that prioritize the financial well-being of their employees will not only enhance the lives of their workforce but also set themselves apart as employers of choice in today’s competitive market.

Here are a few of the financial challenges that are top of mind for employees.

1. Debt is weighing heavily on employee mental health. Household debt is at an all-time high, and it’s no surprise that employees are feeling overwhelmed and stressed when it comes to their finances. Forces driving these record levels of debt include inflation, student loan repayments resuming after a pandemic-era hiatus, and credit card spending. Additionally, high interest rates mean larger mortgage payments and higher costs of living across the board. In fact, 77% of Americans report feeling anxious about their finances. This anxiety can take a toll on mental health, leading to difficulty concentrating at work, fatigue, and trouble sleeping.
2. Modern ways of working lead to new questions about personal finances. The way we work has fundamentally changed in the past several years. With more people working remotely or participating in the gig economy, there are new questions that workers are trying to navigate including taxes and paying for healthcare. It’s important to provide all employees with resources to help them make informed decisions about their finances and understand how to navigate the new normal.
3. People want personalized support, but it’s out of reach for most. With the shift from pensions and employer-sponsored benefits to defined contribution plans, individuals have more responsibility over their finances than ever before. The questions they face around saving for retirement and where to invest are complicated, and individuals rarely get personalized support for the decisions they are facing. Hiring a financial advisor is often out of the question, as it can cost thousands of dollars to get personalized advice.
4. Impact of these trends on employers. Employers are starting to think about financial wellness in the same vein as other benefits (like fertility and mental health), hoping to help the 87% of employees who say they want professional financial help. There is plenty of room for employers to offer help here, starting with personalized financial advice that can lead to better financial outcomes for both employee and employer. The financial wellness of employees is linked to a company’s productivity and overall success. Companies that choose to ignore their employee’s financial health may face greater churn and stressed employees twice as likely to be looking for another job. Not to mention the loss in productivity, with studies showing financial stress costs companies $250 billion annually.

Related: Financial stress is on the rise and there’s a disconnect between employees and employers

It’s important for employers to recognize the evolving needs of their workforce. By embracing innovative benefit solutions and leveraging technology, companies can support the financial wellness of their employees, leading to a more productive, engaged, and loyal workforce.

Ana Mahony is CEO of Addition Wealth.