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Financial wellness and its impact on the workforce

Don't believe us? Employees' money issues affect your bottom line. Badly.

Here's the proof. We've compiled a snapshot of some of the best research we've found regarding how, why and to what extent employee's personal financial affairs, and the stress linked to that, affects their health and productivity as well as your healthcare costs, absenteeism, presenteeism and bottom line.
Go on. Take a look at this research:

FACT BOX

TMS FACT # 30

The Money School has extensive experience creating & implementing successful Employee Financial Education programs for a wide range of clients, including some major financial services companies in South Africa.

TMS FACT # 17

Studies in the USA show that changing employee’s financial behaviour is actually easier than changing their diet and exercise habits.
The result? Decrease in stress and related health-care costs.

TMS FACT # 25

Most employees agree that January is ‘the longest month of the year’ due to receiving their pay too early in December. This invariably means staff begin the year with low morale instead of arriving back rested and full of energy.

TMS FACT # 7 Think debt is low-income problem? Think again.

Among consumers with annual incomes of R300k - R500k, debt to disposable income was just over 100%. For those earning R500k - R750k, the level was 130%, and for those earning more than R750k, the level fell to just under 120%.

Source: Study conducted by the
University of SA’s Bureau of
Market Research in 2008.

Organisations getting ‘half-people The Ford Foundation study confirms, for the first time, that disregarding people’s lives outside of work causes people to live fragmented lives, and organizations to get half-people.
Peter Senge, Director, MIT Center for Organizational Learning - MIT
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Source: Ford Foundation, 1996, p. 2

PwC’s National Financial Wellness Survey Cash flow and debt management issues continue to top employees’ financial concerns. One-third of respondents admitted personal financial issues have been a distraction at work, with 97% of them spending time at work either thinking about or dealing with issues related to their personal finances.
New York, April 2012 - PWC
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The cure for employee stress: financial wellness A recent study [1] showed that 1 in 4 employees are in serious financial distress. Up to 80% of these individuals spend between 12- 20 hours p/m at work dealing with their personal financial problems. A study by Financial Literacy Partners estimates the cost of this lost productivity at $7,000/employee/year.
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Sources: 1) Dr. E. Thomas Garman, President, Personal Finance Employee Education Foundation and Professor Emeritus and Fellow, Virginia Tech University. 2) Financial Literacy Partners, November 2009.

Employee’s financial distress

The results of this study show that those who are financially stressed are more likely to have lower levels of pay satisfaction, spend work time handling financial matters, and be absent from work.

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Results of Employee Financial Wellness Programs The Personal Finance Employee Education Foundation (PFEEF) reports that financial education helps save up to $2,000 per employee annually through increased productivity, reduced health care costs, and better utilization of employee benefits. Their analysis indicates a 3:1 return on investment in education.
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Financial stress leading cause of unhealthy behaviours The American Psychological Association (APA) recognises financial stress as the leading cause of unhealthy behaviors like smoking, weight gain, alcohol, drug abuse, gambling and overextending credit balances. Each time employees turn to these temporary stress relievers, the APA concludes that the stress returns and often at even greater intensity.
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Financial stress causes 55 serious ilnesses

Stress created by major life events such as problems with money and relationships directly increased serious illness. Among the types of illness directly linked to financial woes are heart disease, ulcers, and psychiatric problems.

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Consumer debt out of control When people find themselves getting into financial difficulty, their reaction is generally not to cut back on spending but rather to take out another loan. A large portion of new borrowings by consumers is used to repay existing debt.
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The financial education time bomb …unsecured credit is surging in South Africa. If left unchecked, this will manifest itself in the workplace, society and the way that people do business with each other. Without a doubt a recipe for disaster in the long run.
Marc Ashton, Editor, Finweek - Finweek
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Employee’s financial distress

39% of South Africans (16 years and older) have / use credit products. 26% of these people who are borrowing, do so to purchase food and / or groceries.

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