More than a year into the COVID-19 pandemic, finances continue to be a top cause of employee stress, even above job, health and relationship stress combined. 
In fact, nearly two-thirds (63%) of full-time employees say their financial stress has increased since the start of the pandemic, PwC reports in its 2021 Employee Financial Wellness Survey of 1,600 full-time employed U.S. adults.
Consequently, the survey found that employees whose financial stress has increased due to the pandemic are:
- four times as likely to have experienced a decrease in overall household income and find it difficult to meet household expenses on time each month; and
- twice as likely to have used a payday loan or payday advance in the past year, taken a loan or distribution from a retirement account, or considering postponing their retirement.
So how can employers foster a culture of financial wellness and support to help their workforce? PwC suggests the following four steps.
1. Make the Business Case for Supporting Employee Financial Health
Employers that invest in improving employee financial health can reap long-term benefits in metrics that matter to the organization, but it starts with a commitment to employee financial wellness.
While some employers have taken cost-cutting measures in the past year, PwC suggests considering key metrics the organization values—such as productivity, retention and physical health. “All have costs that directly impact your organization’s bottom line in terms of lost productivity due to distractions, turnover costs like recruiting and training, and larger medical costs when issues aren’t promptly addressed,” the firm observes.
Additionally, employees are more likely to be attracted to another company that cares more about their financial well-being and twice as likely to have avoided addressing a medical issue due to cost.
2. Recognize What’s Happening at Home
PwC’s survey found that household income overall has decreased for more than one in four U.S. employees. Less than half (47%) say they would be able to meet basic expenses if they were out of work for an extended period. In addition, nearly half (49%) believe they’ll need to use money in their retirement plans prior to retirement.
What’s more, the weight of caregiving responsibilities during the workday affects the vast majority of those with dependent children, with 83% reporting having at least one child at home during the workday.
One way employers can help, according to PwC, is by offering personalized benefits to help employees meet their individual needs. “As the U.S. workforce has evolved to become the most multi-generational in our history, employees are looking for a wider range of options to address their own financial situations, from student loan paydown plans to retirement options,” the study emphasizes. And while incentives like workplace flexibility are important, employers may also need to rethink incentives and compensation packages to reflect a spectrum of needs, according to the firm.
3. Leverage Momentum to Promote Good Financial Habits
Employees need a trusted source of guidance customized for both ends of the spectrum—those employees who are saving more and those grappling with serious financial issues, PwC further suggests.
Among the two-thirds of employees who say they’ve changed their spending behavior in the last 12 months, 43% have saved more money and many have reduced their spending on essential items, the firm notes. Those spending cutbacks may not last, however.
“Employers have a unique opportunity to gain employees’ attention and offer practical guidance, capitalizing on employees’ desire to protect themselves from future emergencies. This is the time to encourage intention and prudence when it comes to managing and spending money so employees won’t end up in a worse situation later on,” the firm emphasizes.
Moreover, employee financial assessments can pinpoint where people are struggling and enable organizations to focus and personalize resources for their most vulnerable populations, PwC suggests.
4. Implement a Technology Solution Paired with Human Interaction and Guidance
Employees apparently want help with their finances. According to the survey, one-third of respondents rank a financial wellness benefit with access to unbiased coaches as the employee benefit they would most like to see added at their organization. In addition, PwC found that usage of employee financial wellness programs is at an all-time high.
To be competitive, the firms suggests that employers should provide financial wellness benefit offerings that continuously engage employees. This would include online tools that can help educate employees and assist them in tracking their spending and savings. Employees also expect a high degree of personalization and benefit from one-on-one financial coaching to motivate them.
“Implementing such resources now may also help stave off pent up destructive financial behaviors as the pandemic subsides and consumer confidence improves, when employees may have more opportunities for travel and other discretionary spending,” the firm emphasizes.
PwC’s survey was conducted online in January 2021 among 1,600 full-time employed U.S. adults across a variety of industries.
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