Financial wellbeing takes the spotlight during a cost-of-living crisis
This article was created in partnership with Paytime
As Australia grapples with a severe cost-of-living crisis, employees are finding themselves in increasingly precarious financial situations. According to a recent report by Finder, 3 in 5 (59%) Aussies say they are experiencing financial stress. That's equivalent to 11.9 million Australians under financial strain. It's significantly worse for women, with 69% admitting they have been feeling the pinch. Over nine million Australians (45%) have less than $1,000 in savings, with 20% having no savings at all. This economic pressure is placing a significant strain on workers, affecting not only their financial health, but also their mental wellbeing and productivity.
In this environment, the role that employers play in supporting financial wellbeing is crucial. Paytime director, Steven Furman says providing financial flexibility to staff without them having to ask for it, has direct benefits to the company, not only the staff.
“Such financial flexibility include the provision of financial wellness programs, which include providing staff with on-demand access to their earned wages (Earned Wage Access) in order to access their pay after a shift, budgeting tools, and easy, confidential access to help from qualified financial counsellors during times of economic hardship,” Furman tells HRD.
“By doing this, employers can help alleviate financial stress, thereby fostering a more resilient and productive workforce. One of the leading causes of mental health is financial stress”
Bridging the literacy gap
A significant hurdle to financial wellbeing in Australia is the ongoing financial literacy gap among employees.
Furman notes that many workers lack basic financial management skills, with nearly half of Australians unsure about budgeting and savings, according to Commbank's latest report. Add in the stigma of admitting to financial strain, and many employees are left with a limited ability to handle financial stress and make sound decisions. They simply will not reach out to their employer to discuss their financial stresses, for fear of being judged.
To address this, Furman says companies need to offer easy access to financial literacy, education and counselling, – tools which are increasingly invaluable in a tough economic environment.
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“If employees have access to tools and resources to better manage their finances, they can avoid taking out high-interest payday loans, BNPL schemes and credit cards,” Furman explains.
“It also improves overall financial health by teaching people how to budget, save and prepare for unexpected expenses. For employers, research has proven that this means a much more engaged and productive workforce with lower turnover rates and reduced absenteeism.”
The benefits don’t just end with a stronger culture. The impact of financial stress on employee concentration and engagement can be profound, particularly in high-stakes industries like healthcare or manufacturing as just two industry examples. Furman notes that financial wellbeing support also impacts retention, as an additional dollar or two per hour from a competitor will become more important than loyalty when an employee is struggling.
“Employees who feel supported in managing their financial stress are more engaged, productive, and loyal to their employers,” Furman says. “This supportive environment reduces turnover rates and improves overall job satisfaction.”
The future of financial wellbeing
Until now, financial wellbeing solutions have been a relatively rare perk among employers – but in today’s challenging environment, they are quickly becoming a standard part of benefits packages. Looking ahead, Furman says programs like Paytime are going to be vital in attracting and retaining talent – particularly for businesses with a significant front-line workforce.
“Financial stress is very personal, so employees can be reluctant to participate due to stigma around financial stress and lack of awareness for fear of being judged,” Furman says.
“Overcoming this involves fostering a culture of open communication, continuously promoting the benefits of programs such as Paytime, without employees needing to ask, and ensuring easy accessibility to financial wellbeing resources.”
For Paytime, every feature has been designed with the employee’s feedback in mind. This means employees are able to get in touch with financial counsellors directly through Paytime’s app and are able to access earned wages on-demand if they experience an emergency.
“Additionally, Paytime offers educational resources and financial planning tools that empower employees to make informed decisions, boosting their financial literacy and confidence,” Furman adds.
With 73% of employees believing employers should help improve financial wellbeing, these programs will be crucial for attracting and retaining talent. Employers who invest in such solutions will be better positioned to attract and retain top talent and maintain a workforce with improved financial literacy and reduced stress. It is for this reason that nearly 80% of Fortune 500 companies offer Earned Wage Access to their staff, as its proven over time to be a valuable employee value proposition.
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Steven Furman has has 25 years experience in private equity investing in businesses that have significant frontline workers as their staf complement. A key issue that always came up was financial stress having a significant impact on worker productivity and absenteeism. With financial stress being closely linked to mental health problems, Steven sought to create a solution that provides comprehensive solutions and resources aimed at improving employees' financial literacy and wellness.