Written by: Dan Kofke, Motivational Mentor
For decades, companies have known about the negative correlation between financial stress and job satisfaction. As far back as 2004, studies have shown significant relationships between financial stress, work output, and absenteeism. More specifically, employees who feel financially stressed and do not practice smart money habits are more likely “to waste their work time” and frequently miss work. Researchers have also found that absenteeism and low productivity can be substantially reduced if employers offer “effective workplace financial education.” [1] For this reason, an increasing number of organizations are turning to financial advisement experts to reduce financial stress and improve overall employee engagement.
Smart Money Habits to Help Your Employees
Many financial “gurus” will tell people to get money smart, but what does this really mean? What are some actionable steps to practice smart money habits and set smart money goals over the short and long term? These are the questions we want to answer so that you can help your employees improve their financial lives.
So, If you want to help your employees overcome financial stress and ultimately improve their job satisfaction and performance, here are a few smart money habits to help get you started:
Build up your emergency fund
Most people associate good financial habits with long-term goals and strategies. However, protecting yourself and your family from risk also plays a vital role when making smart money moves. Building up a short-term emergency fund (we recommend 3-6 months of expenses) can ensure that, if you get in an accident and cannot work, have to pay for a major expense (medical bills, car repairs, etc), or lose your job, you have cash on hand to continue paying your bills until you can find a long-term solution.
It is important to note that these funds should be held in an accessible savings account — not an investment account. Why? Because investments require you to take on more risk. What happens if a recession hits and you lose your job and half of your emergency funds at the same time? Just because the paychecks stop coming in does not mean that you won’t have to pay expenses (you definitely will). In short, a healthy emergency fund is one of several smart money habits that ensures you are protected whenever life throws you a curveball.
Don’t trade stocks based on the news
Setting smart money goals almost always entails investing part of your available funds. However, nobody can predict the stock market with 100% accuracy. So, if you have little or no experience investing, you should try to learn as much as you can without letting the latest news and headlines push you into making rash decisions. Instead, stick to a safe investment philosophy that meets your budget and goals.
Headlines are designed to grab your attention and encourage you to keep reading. For this reason, many breaking news stories related to the stock market are sensationalized. More importantly, the stock market can go up or down from one day to the next, but it always trends upwards over the long term. Therefore, if you are tempted to sell off half of your portfolio when the market drops, we recommend waiting to take action. When it comes to investing in stocks, patience almost always pays off.
Rebalance your portfolio
As previously mentioned, evaluating your risk tolerance on a regular basis is one of several smart money habits that everyone should practice. When thinking about long-term investing, younger people usually have greater risk tolerance because they have more time to work and recoup any losses. However, as you get closer to retirement, you won’t want your portfolio to suddenly drop by 20%. So, make sure your investments are properly allocated based on your work status and risk tolerance.
Naturally, you may not feel ready to fully assess your own risk tolerance. Consequently, we recommend talking with a financial advisor and examining your ability to withstand financial setbacks. Then, you can rebalance your portfolio and be prepared for any potential losses in advance.
Do your best
Following smart money habits and financial fitness tips is not always easy. You may find yourself doing great for a few months before sliding into bad habits once again. Rather than getting stressed or feeling frustrated with yourself, remember that this is completely normal. In fact, the vast majority of American workers struggle with financial stress to one degree or another. There are no secret money habits of millionaires that you are missing out on. You simply have to do your best to stick to a practical, growth-centered plan.
So, just try to do your best and don’t beat yourself up if something goes wrong. If you make a financial mistake, don’t linger on it. Move forward. Learn from it and ensure that the past does not repeat itself. If you can’t move past a financial mistake, you will likely get in a rut that will have you feeling more stressed and less productive. This will only lead to further problems down the road. Just let it go, move on, and allow your money to grow.
Encourage Smart Money Habits In Your Organization With Mentoro
If you want to learn more about teaching smart money habits and smart money goals in your organization, or if you want to find out how to begin a financial wellness program for your business, be sure to contact the experts at Mentoro today!
Source:
Financial Stress, Pay Satisfaction, and Workplace Performance
https://journals.sagepub.com/doi/abs/10.1177/0886368703261215
