Financial Wellness Series Part Three – The Link Between Financial Stress, Health and What Employers Can Offer to Have an Impact

As we dive into the third installment of our Financial Wellness Series, we examine how the stress discussed in the previous parts affects our health, both physically and emotionally, and how offering financial wellness programs to employees can be an effective way to mitigate this.

There is a direct correlation between experiencing stress and experiencing physical and emotional health conditions. People with high stress levels experience more physical and emotional health problems than those with low stress levels. [1] As a result, health care costs are 46% higher for workers with high levels of stress[2].

Some of the increased health concerns reported[3]:

• Back Pain (51%)
• Headaches (44%)
• Insomnia (39%)
• Blood Pressure (33%)
• Stomach Ulcers (27%)
• Heart Attacks (6%)
• Severe Anxiety (29%)
• Severe Depression (23%)

Financial stress takes a toll on health and trickles into our overall lifestyle and well-being. Unless a business is completely unique, at least 25% of employees, regardless of their position or salary, are affected by financial stress[4]. It negatively impacts employees in many ways and reduces productivity through:

• Disengagement:
• Absenteeism: Stress as a reason for absenteeism has increased 300% since 1995 and employees with higher levels of stress are less committed to their organization[5].
• Presenteeism: 46% of financially stressed employees spend three or more hours a week thinking about, or dealing with, personal financial issues at work[6] .
• Turnover: Financially stressed employees are more apt to change jobs often, looking for short-term gains to improve their immediate finances.
• Mental Health and Decreased IQ: People with debt are three times more likely to have mental health problems such as depression, anxiety, and psychotic disorders[7].
• Delayed Retirement: The only option for older, financially stressed workers is to continue working beyond retirement age, costing more in health benefits and salary.
• Workplace Accidents: An estimated 60%-80% of on-the-job accidents are caused by stress-related distractions[8].
• Crime & Theft: Stressed and anxious employees are more prone to unethical behavior at work[9].

How do we combat the continuing effects of financial stress on our health?

Benefits plans that include financial education for employees have been proven to work. In fact, three out of four Americans agree they could benefit from answers to everyday financial questions from a professional[10]. Not only do employees have the desire to see financial education included in their plans, years of research show financial education in the workplace is important for reducing employee financial stress and sick days, increasing workplace productivity, and promoting long-term financial well-being[11]. 91% of workers who participate in financial education workshops agree they are getting the information they need[12]. This data shows just how impactful offering financial wellness programs is to the employer and employee.

Offering employees options to become ‘financially fit’ is proving to be very successful and has even become a widely used recruitment and retention tool. In the current job climate, companies need to be aware of and offering programs that set them apart from their competitors. 77% of Millennials and 73% of Gen X are more attracted to a company that cares about their financial well-being[13], and it’s valuable to the employer as well. Research shows adding a financial education component to employee benefits can return $3 for every $1 spent[14].

Financial wellness programs have proven to engage employees of all ages and incomes to help them make better financial choices, reducing their financial stress levels and reversing the negative impacts of financial stress. In addition to this, other benefits seen in the workplace include[15]:

• Increased employee health, morale, and employee satisfaction.
• Greater employee participation and 401(k) contributions.
• Reduced Human Resources costs, not having to deal with processing wage garnishments and requests for payroll advances and 401(k) loans, etc.
• Reduced pressure to increase salaries.
• Reduced exposure to future litigation based on fiduciary liability as fewer retirees have financial problems.
• A positive return for every dollar invested in comprehensive financial education.

At the end of the day, we all want to feel less burden from the effects of financial stress. Wellness programs for employees can not only alleviate that financial stress, but also can increase work productivity and employee satisfaction while decreasing costs. In part four, we will continue to look at wellness programs and explore how employers can start to implement these into their plans.

For more information about financial wellness programs, please reach out to your local AssuredPartners representative!

[1] Goetzel, RZ, Anderson DR, Whitmer RW, Ozminkowski RJ, Dunn RL, and Wasserman J. The relationship between modifiable health risks and health

care expenditures: an analysis of the multi-employer HERO health risk and cost database. J Occup Environ Med. 1998;40(10): 843-854.

[2] Relationship between modifiable health risks and health care expenditures, Goetzel et. al.

[3] Goetzel, RZ, Anderson DR, Whitmer RW, Ozminkowski RJ, Dunn RL, and Wasserman J. The relationship between modifiable health risks and health

care expenditures: an analysis of the multi-employer HERO health risk and cost database. J Occup Environ Med. 1998;40(10): 843-854.

[4] Unless a business is completely unique, at least 25% of employees, regardless of their position or salary, are affected by financial stress18

[5] Financial Stress and Absenteeism: An Empirically Derived Model, Jinhee Kim and E. Thomas Garman, 2003, (CCH Inc., 2002).

[6] PWC Employee Financial Wellness Survey, 2016 Results.

[7] “Studies Show Your Financial Health Could Be a Good Indicator of your Mental Health,” Amy Morin, Forbes, July 21, 2015 and the relationship between personal unsecured debt and mental and physical health, a systematic review and meta-analysis, Clinical Psychology Review, December 2013.

[8] The Impacts of Financial Stress on Your Employees”, benefits Magazine, Patricia A. Bonner, Ph.D., CEBS, June 2016 and The American Institute of Stress, The Herman Group, The Herman Trend Alert, May 2003.

[9] Kouchaki, M., & Desai, S. (2014). Anxious, Threatened, and Also Unethtical: How Anxiety Makes Individuals Feel Threatened and Commit Unethical Acts. Journal of Applied Psychology.

[10] The 2016 Consumer Financial Literacy Survey, Prepared by Harris Poll

[11] Every American Financially Empowered, A Guide to Increasing Financial Capability among Students, Workers and Residents in Communities, The White House, Washington, May 2012.

[12] Workplace Financial Education Improves Personal Financial Wellness, E. Thomas Garman, Jinhee Kim, Constance Y. Kratzer, Bruce, H. Brunson and So-hyunJoo, Association for Financial Counseling and Planning Education, 1999.

[13] PWC Employee Financial Wellness Survey, 2016 Results.

[14] Garmon 1997. Garman, E. T. (1999). The business case for financial education. Personal Finances and Worker Productivity: Proceedings of the Personal Finance Employee Education Best Practices and Collaborations Conference, 2(1), 81-93. Roanoke, VA: Virginia Polytechnic Institute and State University. 25Ibid. 26Happiness and Prod

[15] Ibid.