Fears of financial scarcity have become rife, which is unsurprising in the current environment where people’s incomes are struggling to keep up with their outgoings. These worries can often generate a knock-on effect on mental health and wellbeing, as well as workplace performance.

But how can a scarcity mindset hold employees back from giving their best performance at work? Here are some of the ways in which this manifests itself in the professional environment.

Mind Over Money delves into the scarcity mindset and the groups of the UK workforce most likely to be affected by this.

Absenteeism

An increasing amount of external research confirms a correlation between absenteeism and financial stress.

In a recent piece of research into how Wagestream’s members use flexible pay to support their budgeting and manage their finances, we discovered that 22.1% of people use it to cover the cost of their commutes.

This finding highlights a universal expense that is often overlooked. Internal policies and benefits are usually built to support colleagues in the workplace; however, do those policies support your colleagues to reach the workplace in the first place?

Physical and mental health

All forms of wellbeing are linked, the mental, the physical, the financial, and so on. One of the more concerning statistics on this subject is from a study by Harvard University which concluded that financial stress can impact an individual by up to 13 IQ points when facing money worries. The significance of this is obvious when you note that 13 IQ points can take someone upwards from 'average' to 'superior' intelligence, or downwards to 'borderline deficient'.

Anxieties and concerns that burden the mind also naturally creep their way into the physical body, to the point that it can directly detract from physical wellbeing. Think increased stress hormones, higher heart rates, weakened immunity, insomnia and so on. It circles us back to issues of presenteeism and absenteeism, labouring the point that happy and supported employees make for present and productive teams.

Limiting scarcity fears as an employer

There is no perfect solution to supporting staff with their finances, and often it is the multi-pronged approaches, those which promote choice and flexibility, that are most valued by teams. Education obviously plays a huge role in building financial confidence in your workforce, as well as transparent and accessible money-adjacent policies (pensions, parental leave, sick leave, etc), to establish clarity and peace of mind for staff.

However, education and policies are not enough to create a winning financial wellbeing strategy; practical and interactive solutions are often more highly valued by teams, as these allow the creation of bespoke financial wellbeing toolkits which suit their needs. Flexible pay specifically is an essential tool when it comes to managing fears of financial scarcity, as it allows employees to choose when they get paid and manage budgeting and outgoings more simply. By providing flexible access to pay - the fear of a ‘lack’ that often drives the scarcity mindset can be mitigated.