The Impact of Debt on Employee Mental Health: What Employers Can Do to Help
Research carried out last year by the financial solutions firm Neyber found that 50% of employees had to regularly borrow money to pay their bills and cover basic expenses. The survey of 10,000 employees also found that 1 in 10 people said they felt their finances were out of control, and they were faced with spiralling debt.
The stress of debt affects employees’ physical and mental health, and their performance at work. Neyber’s research also found that 60% of employees struggle to remain focused at work, their performance drops, and the effects of stress often led to health problems and time off work.
What are the main causes of employee financial problems?
The rise in zero-hours contracts that provide an unstable income which makes budgeting virtually impossible.A lack of adequate savings or any type of financial cushion. Many people don’t have any resources to fall back on if they suffered a financial setback like losing their job or an unexpected expense. Significant life events like bereavement, ill health, or divorce can cause financial worries.
The effects of debt on mental health
Debt is a difficult thing to talk about, and many people bury their head in the sand and ignore it until the problem is no longer manageable. Being hassled by creditors and mounting interest on debts often leads to depression, anxiety, stress, insomnia, and even suicidal thoughts. Not only that, debt can negatively affect physical health too, and weight loss, fatigue, headaches, digestive problems, and a weakened immune system are common.
What can employers do to help?
Looking after the financial wellbeing of employees makes good business sense, given that financial worries can reduce performance and increase the likelihood of sickness absence. So what can employers do to make sure that work becomes a place where they can access help rather than another stressor?
Provide employees with financial education and resources
Providing advice on managing finances, savings, budgeting, and pensions can help employees manage their finances better. It also makes people feel more comfortable about talking about their finances at work. Another option would be to signpost employees to debt advisory services such as Citizen’s Advice or The Money Advice Service.
Introduce an employee savings scheme
This is an excellent low cost way of helping employees to save a percentage of their income and ease their financial stress.
Sign up for discount schemes
Sign your organisation up for discount schemes where employees can get money off goods and services with participating retailers. This will help them to stretch their pay that little bit further.
Childcare vouchers provide considerable savings for employees and employers will save money on their National Insurance bill. Childcare is a huge financial burden for many parents and this will go a long way to helping them cope.
Low wages are one of the main reasons why employees struggle financially and end up in debt. Becoming an accredited Living Wage Employer will ease the financial stress on employees, and it will help you recruit and retain employees in the long-run.
Show them your door is open
Of course, not everyone is going to want to talk to their employer about being in debt, but employers should let staff know that their door is open, nonetheless. Employers can include information on debt advice and money management in newsletters and memos, and should emphasise that any discussions will be kept confidential.
Are financial worries keeping you up at night?
The best way to regain control is to get a Money Health Check. This will give you a clear picture of how things stand with your finances, show you how you can build your savings, repay your debt, and get support if you need it. Try this free tool:
Anyone can be affected by financial worry and debt, and employers are well placed to offer support. Remember that a mentally and physically well workforce is a happy and productive one!