‘How financial education can improve your bottom line’, Radcliffe & Newlands’ Marketing Director, Christian Lennon writes for ADVO Group


“In a nutshell, sickness, absenteeism and other health and behavioural problems are increased by financial stress. Financial stress can be reduced by educating employees to make better financial decisions and plans.

Evidence that financial stress can impair employee health and productivity

There is evidence that financial stress can influence health and even mortality rates (Over the limit: the association among health, race and debt, Drentea & Lavrakas, 2000). As well as poor health, the financially stressed also “report disagreements with friends, family members and co-workers; restricted social life; and reduced job productivity… Such impairments can affect an employee’s coping skills, attention and concentration ability to the point of decreased job attendance, reduced workplace performance and hamper job retention for employers.” (Financial Distress Among American Workers, E. Thomas Garman et al, 2005).

Financial stress is not restricted to lower paid workers

As you would expect, the more you earn the less financial stress you are likely to have, however those on higher incomes can still have a high debt to income ratio which causes stress.

Financial stress springs from many different causes which tend to vary depending on how financially stressed the individual is. For example, those who are highly stressed may well be concerned about: not having enough emergency funds; living beyond their means; high debt levels; not saving enough for retirement. Those who are less stressed are more likely to be worried about: not saving enough for retirement; badly managed investments; lack of protection/insurance; estate planning. Clearly the former have objectively far more to worry about but all the same, stress is still there for those on better incomes, albeit focused on what you might be tempted to call first world problems. We should not forget that self-perception is used in research in this field because psychological well-being is difficult to measure objectively.

The problem of debt

Over-indebtedness can increase environmental health hazards – things as simple as not being able to afford warm winter clothing or other health promoting equipment. The worry can also lead to an increase in unhealthy behaviours like smoking, weight gain, and alcohol and drug abuse.

Even if an employee is not currently suffering financial hardship, a lack of financial preparedness for unexpected events (divorce, illness, death in the family for example) can leave them vulnerable to a pile up of new and pre-existing stressors. This cluster of stressor events can overcome their resources and ability to cope, causing hardship which can be difficult to recover from. Better preparation can help them to weather the storm rather than succumb to it.

Which employees are most likely to be under financial stress?

There appears to be a significant gender gap with more women than men suffering high financial stress levels. Perhaps more surprising is that some reports show middle-income employees have higher financial stress than either low-income or high-income groups – of course this may be because they are at that mid-career / mid-life stage with young children to support. Couples, who are more likely to have dual incomes, tend to suffer a little less than singles. But apart from demographics, there are situational factors. Some which can affect all parties e.g. moving home. Of itself a stressful activity but, if combined with other factors such as a particularly busy period at work or separation from a partner, it can be very indeed. Others, such as approaching retirement age with no realistic plan in place to fund a pleasant retirement, will obviously apply more to those of a certain age.

Financial education works

Research shows that education can have a major impact. Adults exposed to personal finance education in school are more likely to save and plan for retirement and to accumulate greater wealth (Financial Literacy, Schooling, and Wealth, Berman et al, 2010).

We already provide financial education to a broad range of firms from household names in the FMCG sector to private banks – employees at all levels can benefit. In many cases the areas we need to include in our educational programme are the same but we can also design bespoke programs to meet the specific requirements of a company, taking into account the issues most likely to be faced by their employees or the financial benefits offered by that firm. We have the ability to cover any financial topic, from the basics of how to manage your budget or deal with debt through to buying a house or planning for retirement.

Effective financial education can empower employees to make lasting changes to the way they manage their personal finances and reduce their stress, while simultaneously reducing employer operational costs.”

About the AuthorChristian Lennon is the Marketing Director at Radcliffe & Newlands. Christian has been in financial services marketing since 1997. His experience spans both consumer investment products and trade marketing.He has responsibility for marketing but is involved in everything at Radcliffe & Newlands from new product development to business strategy and planning. He is also responsible for developing individual strategies to work with employers who want to offer enhanced employee benefits, accountants and solicitors.

For more information visit rad-new.com