Poor financial wellbeing negatively impacts mental health and this has knock-on effects on the individual. One knock-on effect is on performance in the workplace. It’s no surprise that poor mental health reduces effectiveness at work: every job requires presence, focus, sustained attention and some form of interpersonal contact and poor mental health reduces our ability to perform in each of these domains.
Financial stress and poor mental health
Financial stress leads to poor mental health for a number of reasons.
One of them is because when we are under chronic financial stress we adopt a ‘scarcity mindset,’ where all attention is focused on getting through the next day or week or month.
This obviously leaves limited capacity to focus on other areas of your life, which suffer and lead to worsening mental wellbeing.
Mental health issues can affect many areas of our lives, but one of the key areas is our performance at work.
After all, we need our brains to focus and undertake the tasks we need to do, so anything that undermines our mind will therefore undermine our ability to thrive at work.
Absenteeism and presenteeism
The first way poor financial wellbeing makes us less effective at work is through absenteeism and presenteeism.
A total of 70 million working days are lost each year due to absenteeism because of mental health problems, with the Dutch National Institute for Budgeting Advice (DNIB) adding that staff with financial stress tend to take on average seven extra sick days annually.
If staff are absent, they are obviously not productive – and it’s easy to calculate the loss. But with presenteeism it’s much harder and it’s likely to be under-reported. There’s also the knock-on effect of presenteeism, where a lack of suitable recuperation or rest leads to absenteeism in the future.
Absence or presenteeism from mental health and financial worries can be particularly tough on people because not everyone is comfortable talking about these issues and they tend to be ‘hidden’ issues, which may lead to people hiding the real reasons for their absence – which can further impact mental wellbeing.
In total, the full costs of absenteeism and presenteeism due to poor financial wellbeing have been estimated at £1.56bn a year [PDF].
Reduced focus – and the spiral of consequences
The DNIB also found that staff with financial stress are 20% less focused and productive at work. Feeling good at your job contributes to positive mental health and anything that undermines both your actual performance and perception of performance can affect mental wellbeing.
And, if reduced focus and productivity lead to negative consequences such as increased managerial oversight, this can further impact mental wellbeing. It’s a slippery slope.
Additionally, amongst the 40% of people who now say they are worried about money, these people demonstrate that they are 760% more likely not to finish daily tasks, 600% more likely to produce lower quality of work and are 220% more likely to be looking for a new job.
Just under eight in 10 (78%) say they would move to an employer who offered more support for their finances [PDF], so it’s not surprising that mental health issues caused by poor financial wellbeing can increase attrition.
Why this is an employer’s problem
Every industry remains people-driven, particularly those with front-line workers. The effectiveness, focus and wellbeing of your people is therefore one of the biggest factors influencing organisational success.
If there are systemic issues that undermine mental health, which in turn massively impacts productivity, performance and presence in the workplace, it’s incumbent on you as an employer to tackle the issue and empower your people to be the best employees they can be.
Wagestream is designed to empower individuals to take control of their financial lives and build long-term resilience. Take a look at the products we offer.