Financial wellness: Why it matters now more than ever

When an employee's financial wellbeing improves, then it will reflect in their workplace productivity

Financial wellness: Why it matters now more than ever

The COVID-19 pandemic has been the catalyst for unprecedented financial pressures for both employers and employees, resulting in budget cuts, redundancies and mental health concerns.

Even before the onset of Coronavirus, money was found to be the greatest source of stress in our lives, outranking the workplace, relationships, and even personal health, according to studies around the world.

In New Zealand, financial worry is impacting the lives of people in a myriad of ways, with women and young adults suffering the most.

The Commission for Financial Capability (CFFC) found the vast majority (69%) of New Zealanders are concerned about their money, with that figure rising to 74% of women and 82% of those aged 18-34.

Furthermore, COVID-19 has only highlighted the lack of financial wellness in New Zealand and the importance of financial literacy, according to Angela Vale, CEO of Footprint Connect.

Vale told HRD that when an employee’s wellbeing improves due to financial wellness, then it will reflect in their workplace productivity.

“Anyone that is feeling insecure or concerned about their financial situation may greatly benefit from being given access to tools and resources that allow them to learn and act in their own time and at their own pace,” she said.

“Doing this for ourselves leads to increased personal empowerment which in turn lifts our confidence and we feel more capable and less vulnerable.

“We all have basic needs for food, safety and security, for ourselves and those we care about. When we feel these things may be threatened, there is no way we can be as productive at work”.

In fact, many studies have found money stress impacts mental and physical health to the point where it flows through to stifle work performance and company profitability.

And financial concerns manifest in a variety of ways, with 49% of New Zealanders feeling stressed, 34% missing out on social activities, 31% not accessing health services when they might have otherwise, and 28% making unhealthy eating choices, according to the CFFC.

Read more: Health and safety: Top challenges for 2019

Vale said that one of the best things to address wellbeing is to “focus on what we can influence” because “it’s amazing how much better we feel when we stop thinking about all the unknown and put a plan in place”.

“This could include any or all areas of money management such as saving, budgeting and even investing to address immediate and long-term financial needs,” she said.

“People often don’t realise the importance of estate planning at this time, assuming it’s a retirement topic. However, this is completely wrong.

“How a savings account is set up, the way insurance policies are written and how we own our homes all impact a person’s estate and their Will. 

“These are decisions we are making today and therefore they should form part of our thinking as we look into our finances.”

She added that making a Will can be a quick, cheap and easy thing to do and from her experience, it really does give peace of mind to both the younger and older generations. In particular, they know that those they care about have the support that only a Will can provide.

“Perhaps equally as important is seeing our young adults start to think ahead and act earlier when it comes to driving their own financial wellness.”

This is significant given the CFFC found that 10% of those aged 18-34 take regular days off work due to money worries.

However, one misconception young people have is they don’t have enough valuable possessions to warrant getting a Will, without considering their KiwiSaver account or any life insurance they might have through their employer.

“If you die without a Will, your family will lack the legal right to make any important decisions about things such as estate distribution,” said Vale.

Unless your estate is under $15k, your family will be bound by legislation, which will dictate things such as: who will administer your estate; who will get your assets; when they’ll get those assets; and who will have the legal authority to look after your children.

Read more: WHO offers physical and mental health advice

“Many people assume everything will go to their parents or to their partner. They often don’t realise we are governed by the Administration Act which says if you die without a Will – in addition to the extra costs and time - there is a prescribed list of who gets what in your estate.”

All of this just goes to show that the topic of financial wellness is indeed broad, so it’s no wonder that during this particularly challenging period employees may be distracted or worse, distressed.

With most HR professionals needing to do more with less as they look into setting next year’s employee benefit budget, now may be a good time to consider a financial wellness option.

To learn more about Footprint Connect’s financial wellbeing program, click here.

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