Several countries around the world, including Australia, are in an economic downturn that is causing financial stress. In Australia, one-third of people are carrying high levels of personal debt. Some are suffering from mortgage stress where their homes are worth less than their bank loans.
Unemployment levels are high, economic growth is slow and wages growth almost non-existent. Couple this with growing casualized and part-time employment and we have a nation under stress.
This study looks at the link between financial stress and loss of personal control with depression, sleep loss, relationships, conflict and domestic violence.
Almost 1 in 3 Australians Experiencing Financial Stress
The economic crisis is linked to a rise in unemployment, an increase in private debt, as well as a rise in mental health problems in the general population. Households with outstanding non-mortgage credit debt report worse mental health, especially if the debt is high. Adults who live in poverty have a risk of depression twice as high as those who do not.
The Workplace Financial Wellness Index reports that:
Over 66% feel that worries about money make them for fearful, anxious and depressed
Over 60% think that they are physically affected by financial stress
75% argue about money with their partner or family
90% avoid social functions to avoid spending money.
The Impact of Financially Stressed Employees on Business
Employees experiencing high levels of financial stress and who have poor financial wellness is a major drag on Australian businesses. The total cost estimated to be $33 billion per annum. Financially stressed employees who lack financial wellness tend to be more stressed, take more sick days and show higher levels of presenteeism.
In this study, financial wellness is:
A state of being healthy, happy and free from any financial worries and stressors
Being able to live your desired lifestyle for the rest of your life without financial anxiety or fear
Having a clear understanding of their financial situation and having the ability to live within their financial means
When workers are financially stressed, morale is often low. Large numbers of stressed, unhappy and disengaged employees highlight the need for education and financial planning for more Australians in the workplace.
What Can Employers Do?
Workplaces should constantly be aiming to improve the financial wellness of their employees. Financial literacy education for employees is an important step. The study finds that financial literacy underpins financial wellness, as those who report having higher financial literacy typically have stronger financial plans in place. Most employers believe one on one sessions with an adviser is very valuable in increasing financial literacy in their workforces.
However, financial advice needs to be easily accessed and made readily available to employees. Help needs to include information on Super and future planning for significant events in life and retirement. Safe Work Australia suggests that employers should monitor psychosocial hazards by:
having conversations with workers, supervisors and health and safety specialists
inspecting the workplace to see how work is carried out, noting any rushing, delays or work backlogs
noticing how people interact with each other during work activities
reviewing relevant information and records such as reporting systems including incident reports, workers’ compensation claims, staff surveys, absenteeism and staff turnover data
using surveys to gather information from workers, supervisors and managers.
What Can Individuals Do?
There are several actions people can take to help them to manage their finances.
Create a budget – List what you earn, owe and spend to identify areas where you might cut back and make savings.
Regularly save a bit of money – Save just a few dollars regularly because it gets you in the habit of not spending every dollar you have every week.
Avoid using credit cards – Where you can pay cash. Where possible, try to have credit cards with low limits.
Put some cash aside for emergencies – An emergency fund reduces the need to use high-interest funds when something unexpected happens.
Have the same money goals as your partner – Being on the same page is vital to reduce arguments over money.
Compare lenders – Refinancing and shopping around for other lenders can shave a significant percentage from your interest rates and lower repayments.
Take out insurance – Life insurance and income protection insurance; house and contents insurance all help when things go wrong.
Think and plan for your retirement – Where you can try to put away a little extra into your Super to reduce financial stress when you retire.
Workplace mental health solutions delivered via smart devices and online are an efficient way for organisations to provide quicker, available support and training to address stress. See: https://eapassist.com.au/digital/