When leaders consider their team’s well-being, factors such as mental health, physical fitness, nutrition, and adequate sleep are typically top of mind.
Financial wellness doesn’t usually come up, but it should — because it can have a major impact on all facets of a worker’s life. The National Payroll Institute’s (NPI) Annual Survey of Working Canadians found that the number of people who were feeling a money crunch rose 20 per cent last year.
More than one-third (37 per cent) of respondents were in the “financially stressed cluster,” it found, continuing a trend that began in 2021 — after an initial decline in 2020 when the pandemic-related lockdowns forced Canadians to save which, with the benefit of hindsight, was the calm before the storm.
“The frightening reality of this storm is that the contributing factors to financial stress are becoming more challenging than ever for Canadians to overcome,” said Peter Tzanetakis, Toronto-based president of the Institute.
Janice Holman, Halifax-based principal of investment consulting at Eckler, said there is a strong correlation between financial and physical health — and the data shows people who are stressed over money are definitely losing sleep as a result.
“There’s a lot of deep research that shows the correlation between the lack of sleep and your physical and mental health,” she said. “It also means people are less productive at work because you’re either tired or distracted.”
It can also lead to missed time from work due to mental health days or running around to appointments as they deal with their finances, said Holman. And the long-term health consequences can be very serious, including physical health conditions like cardiovascular disease from all the stress.
“I don’t want to say slippery slope, but things can get a lot worse as time goes on,” she said.
Solutions for employers
The obvious solution, and the one most likely to be advocated by workers, would be to pay them more. But organizations don’t have unlimited compensation budgets and it wouldn’t necessarily treat the root cause — people with large salaries can still have financial issues.
The first step is for employers to embrace the role they can play in the financial literacy of their workforce, she said.
“The employer is seen as a trusted source of information,” she said.
One of the most effective tactics is to over explain the benefits that are currently being offered.
“Most employees aren’t even aware of all the benefits that are available to them, nor do they know how to take advantage of them,” she said. “And that costs the employer nothing.”
She’s a big fan of using personas — examples of actual or hypothetical employees at different stages of their life and how they might take advantage of the benefits being offered.
Flexibility is key
Holman is seeing a lot of flexibility with savings programs that aren’t just about retirement — but also things to help with more short-term needs. That includes things like savings programs to help younger workers pay off student debt or the introduction of group Registered Education Savings Plan (RESPs) to help young parents stash cash for education.
“Another really simple thing that I’ve seen that works really well is just allowing employees to direct their money to more than one bank account,” she said. “We all suffer from mental accounting, that we bucket our money in certain ways.”
Allowing an employee to direct even something like $50 per pay to a separate bank account can provide a way to build up an emergency fund, said Holman.
“That alone can save them from going down a bad financial management road, right? You hit an emergency, you have to take on debt, and then you can’t pay the debt back,” she said.
Cost of living crisis
Aws Al-Hasani, a Montreal-based financial planner at Dialogue, a virtual-care provider, said the cost of living in Canada is very high right now — and financial literacy is very low.
He sees an opportunity, for all generations, for employers to provide leadership and resources.
“Younger people are struggling just as much as old people with their finances,” said Al-Hasani.
The difference, though, comes in how that advice gets delivered and used.
“Older generations have the very traditional means of getting their information,” he said. “Younger people are more open to kind of wanting that independent consultation.”
They’re looking for a professional that is easy to access, he said.
Social media versus real life
Holman said while all ages can benefit from more information, she does see a shift from the younger cohorts who are more open to talking about money — though not all of that is necessarily positive.
“While they’re talking about investing, which they do a lot — that’s sexy. It’s Bitcoin, it’s Reddit, it’s all of these social media-driven events, which are their lives,” she said. “But I don’t think they’re as open to talking about their personal circumstances and potentially how close they are to living on the edge.”
Some young people, because of social media, like to pretend they have a more luxurious life than they can actually afford, she said.
“People are creating a mirage of investing, but may they actually don’t have the money to be investing,” she said. “It might be more of a conversation they’re having, but I’m not sure it’s an honest conversation.”
How to help
If a worker walks into their manager’s office, shuts the door, and asks for help, there are a few ways to respond, said Holman.
“Being empathetic is really important, as the employer, to recognize the situation your employee might be in,” she said.
Most employee assistance programs (EAPs) will include some level of financial counselling, and that’s a good place to start, she said.
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