Financial stress forcing Aussies to take work leave
More than two out of five financially stressed Australians have reported taking time out of work to deal with their personal finances, a new survey by TAL has revealed; however, employers’ efforts to improve financial literacy, with support from superannuation and banking partners, can pay big dividends for employee health and workplace productivity.
According to the survey, part of life insurer’s Financial Health and Literacy Whitepaper, one in four (25%) respondents reported that they are experiencing a high level of financial stress, hampered by current cost of living pressures and a record jump in interest rates.
A further two out of five (40%) said that high financial stress is negatively impacting their work, rendering them “disengaged and ineffective” with their work activities.
Nearly one in 10 individuals who had self-reported high levels of financial stress said they were frequently taking time out of work to deal with their financial concerns.
“Employees under financial stress are twice as likely to be using work time to take care of their personal financial issues compared to those with low financial stress levels,” TAL wrote in its whitepaper.
Employees’ lack of understanding of financial products (including insurance and superannuation offerings) is increasing levels of financial stress, the life insurer noted.
The survey found that four out of five (82%) respondents believed they would benefit from access to financial education and tools, regardless of how confident they feel about the future. However, only 15% reported that they had been provided these educational offerings by their employer.
The research also revealed a strong correlation between rates of financial literacy and financial stress, which TAL said showed an important role for employers, alongside partners like superannuation funds, in addressing knowledge gaps through financial literacy resources and education.
“By not having access to the education they need to address their financial issues, employees are feeling out of their depth. This perpetuates the cycle and leads to even more stress,” the report wrote.
A growing appetite for financial education
In a self-assessment of their understanding of financial products (with each product category rated out of 10), employees rated themselves just 5.5 for life insurance, 5.3 for income protection insurance, 4.8 for retirement incomes/annuities, and just 4.1 for ETFs.
The highest score, for superannuation, was 6.8 out of 10.
There also appeared a dearth of knowledge on life insurance offerings. Just 5% reported having a strong understanding of how to calculate the amount of life and TPD insurance required, while just 6% fully understood the difference between insurance coverage from inside their super accounts against those offered directly by an insurer or financial adviser.
Yet, there appeared a growing appetite for financial education or tools to address these knowledge gaps. The survey found that one in three employees said they would use financial education or tools at least once a month if they were offered by their employers. A further 33% said they would use them once every six months or so.
“[When] organisations help their employees with financial issues by providing access to education and resources, it can have positive impacts on their physical and mental health – as well as their financial health,” TAL wrote.
“This can lead to increased productivity and focus in the workplace once employees are able to get on top of their financial issues.”
TAL’s general manager, industry fund partnerships, Dan Taylor said the research findings represent a real opportunity for employers, working alongside insurers and super funds, “to provide tools and resources to help them understand and be better informed in making decisions to improve their financial health”.
“[Increasing] an employee’s financial literacy is one of the best ways to help them lower their financial stress,” Taylor said.
“Supporting the financial well-being of employees can involve helping them understand when they may be impacted by financial stress, access the right expertise and take action if needed.”.
He added: “We also recognise superannuation funds are looking to build value into their relationships with employers and employer groups, to augment their existing programs to support employee wellbeing.”
Around 800 currently employed individuals with a superannuation account were surveyed by TAL.