The rising cost of living is hurting more than employees’ wallets—it’s hurting their productivity. And employers are seeing the effects firsthand.
ZayZoon’s recent 2024 State of Employee Financial Wellness Report found that while only 36% of employees reported that financial stress impacts their work performance, 63% of employers believed employees who struggle financially perform worse at their jobs.
We’re in the middle of a financial wellness epidemic. And to navigate it effectively, employers need to address financial stress like any other aspect of an employee’s overall well-being that affects performance.
Financial wellness programs can empower employees to achieve greater financial stability and, in turn, better outcomes at work. But to truly boost morale and productivity in the long run, these programs must foster a culture of support, targeting employees’ core needs and breaking the taboo around financial challenges.
How Financial Stress Manifests in the Workplace
Research has repeatedly shown that financial stress takes a toll on our psychological well-being, but how exactly does this play out at work?
Based on our insights from 5,000 employees and 500 HR professionals, the situation is more severe than we might expect. Almost 30% of respondents had a negative balance of $600 at the end of each month, just from covering required bills and expenses.
Understandably, this financial pressure lingers when employees clock in to work:
- 43% of employees said financial stress impacts their focus
- 22% of employees said financial stress impacts their morale and confidence
- 11% of employees said financial stress impacts their punctuality and attendance
And HR professionals observed similar issues, but at a higher rate:
- 65% of HR professionals said financial stress impacts employee focus
- 51% of HR professionals said financial stress impacts employee morale
- 42% of HR professionals said financial stress leads to unexcused absences, and 35% said it leads to excessive lateness
While employees are aware that financial stress has an influence on their work, employers’ insights show the detrimental effects are even more pronounced than employees recognize or feel comfortable admitting.
The bottom line is that employees want to feel capable in their work, and businesses need engaged employees to drive growth. So, if 1 in 3 respondents agree financial stress has a strong negative impact on employee morale and mental health, financial stress should be approached as an organizational issue, not just an individual one.
How to Implement a Financial Wellness Program that Will Actually Help Employees
Expecting employees to check their financial stress at the door isn’t only unfair, it’s unrealistic. Employers already play a role in employees’ financial lives when they decide on a weekly, bi-weekly, or monthly pay schedule. And with more targeted intervention, HR and business leaders can help employees tackle complex financial challenges.
Address Immmdiate Needs
Financial wellness programs tend to offer tools that support long-term planning, like saving for retirement. But 73% of survey respondents cited covering basic necessities—like bills, rent, and groceries—as a top financial stressor.
Remember the $600 shortfall 30% of employees reported? Many employees need more immediate support to address the full scope of their financial challenges.
A tool like earned wage access (EWA), which allows employees to access earned wages ahead of payday, can help address cash flow issues in real time. With 63% of workplaces reporting increased productivity after offering EWA, it’s clear this intervention is one way to help employees refocus their attention on work.
EWA provides essential relief for employees feeling the strain of living paycheck to paycheck. And once more pressing budgetary concerns are addressed, other financial goals — like building savings or paying down debt — can come back into view.
Balance Privacy with Open Communication
Personal finances are a touchy subject in the workplace, which makes it challenging for employees to admit they’re struggling. Protecting privacy can go a long way toward helping employees feel more autonomous and in control.
Unlike a pay advance, using EWA or an emergency savings fund (ESA) doesn’t require interaction with a manager. Whether it’s for a medical bill or rent, employees can manage their cash flow without explanation. Plus, it means less work for the 62% of HR professionals who said manual pay advances are a time-consuming process.
At the same time, there’s a real opportunity to tackle the stigma around financial challenges. With 61% of employees living paycheck to paycheck, no one should feel isolated in their experience. Creating opportunities for colleague-to-colleague financial mentorship or employee support groups can build shared connections and serve as an important reminder that financial challenges are often more common than we realize.
Don’t Just Check the Box, Invest in Ongoing Education
Building a culture of financial support isn’t a one-and-done deal. In other words, don’t just give employees a PDF outlining a new financial program — offer them ongoing guidance.
When evaluating financial wellness programs, consider the support you and your staff will receive. How will the provider guide your implementation process? Is there hands-on customer support to tackle any unexpected roadblocks?
On the employee side, are there Q&A features for people to access information without fear of judgment? Does the program have financial education opportunities, like budgeting, saving, and credit building to help employees pave the way to more sustained financial stability?
Before deciding, also take time to figure out the unique financial challenges showing up in your workplace. Surveys or 1:1 meetings with employees can be a great way to gauge their top priorities, so you can adjust resources in response.
Key Takeaways
Reports of employee financial stress underscore an urgent need for a culture shift in the workplace. It all starts with a balanced approach to financial wellness that identifies and prioritizes employees’ most pressing needs first, while still enabling ongoing financial education.
Investing in the right tools can transform how employees show up to work, making them more productive, boosting morale, and putting your organization on a path to achieving its long-term goals.
Tate Hackert is president and co-founder of ZayZoon.
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