In a new report, “Financial Stress and the Bottom Line,” PwC finds that it is very beneficial for companies to offer financial wellness programs, as they alleviate workers’ financial stress, boost their productivity, avoid higher health care plan use and help workers save more for retirement and health care.

“Our research is showing that financial stressors are not only negatively impacting employees but are costing the employers,” says Kent Allison, a partner and national practice leader with PwC. “Stressed employees are found to be less productive, take more time off to deal with financial matters, are more likely to leave the company for higher compensation, and are more likely to cite health issues caused by financial stress. These findings evidence a direct correlation between an employee’s financial well-being and a company’s bottom line and may help justify an investment in a financial wellness program.” Truly successful financial wellness programs change people’s everyday behaviors and have lasting effects, PwC says.

This year, PwC surveyed 1,600 workers and discovered that 53% feel financially stressed. Employees reporting financial stress tend to be younger and are more likely to be female; 35% of Millennials and 44% of Gen X say they are financially stressed, compared to 21% of Baby Boomers. Fifty-nine percent of women say they are financially stressed, versus 41% of men.

Among those who are financially stressed, 72% say they could not cover an unexpected expense, 71% say they consistently carry credit card debt, 67% say they struggle to pay their bills each month, and 48% are using their credit cards to pay for monthly essentials.

Asked how this financial stress is impacting them, 28% say it is impacting their health, 23% say it is affecting their relationships at home, 22% say it is impeding their productivity at work, and 12% say it is causing them to occasionally miss work. Fifty percent say they spend three or more hours each week dealing with personal financial issues.

Among those earning less than $75,000 a year, 49% say they find it difficult to meet their monthly household expenses, compared to 32% of those making $75,000 or more a year. Only 34% of those in the lower income bracket say that if they were out of work for an extended period of time, they would be able to meet basic expenses, compared to 61% of those in the $75,000 and up income bracket. For those making less than $75,000, 60% say they find dealing with their financial situation is stressful, compared to 43% of those in the higher income bracket.

Even Higher Earners Have Financial Concerns

But even a large percentage those making $75,000 or more have some financial issues, like consistently carrying balances on their credit cards (60%) and using their credit cards for monthly necessities, like groceries, because they could not afford them otherwise (37%). And this group also reports having many financial worries, like not having enough emergency savings (44%), not being able to retire (34%) being laid off (21%), not being able to meet monthly expenses (20%) and not being able to keep up with debts (14%).

Thus, PwC says, financial wellness programs need to go beyond retirement savings to encompass guidance on building emergency savings. Otherwise, the firm says, workers might raid their retirement funds.

PwC also says that 54% people who feel financially stressed expect they will have to postpone retirement; those reporting financial stress are twice as likely to have less than $50,000 saved for retirement than those who do not feel financial stress (51% versus 26%) and are more inclined to take out a loan from their retirement plan (57% versus 30%). Even 30% of those who do not feel financial stress are planning to postpone their retirement.

The Impact on Employers

“The effect of financial stress on worker productivity is striking,” PwC says. Among those who are financially stressed, 48% say this has caused them to be distracted at work, compared to only 10% of those who are not financially stressed. Fifty percent of the financially stressed workers spend three or more hours at work each week dealing with these issues, 31% say their productivity has suffered, and 16% miss work occasionally.

PwC estimates that for employers with 10,000 workers, these distractions are costing them $3.3 million a year in lost productivity.

However, financial wellness programs can go a long way to alleviate these fears, PwC says. Among financially stressed workers who have been offered a financial wellness program, 52% say it helped them get their spending under control, 43% say it helped them prepare for retirement, 41% say it helped them pay off debt, and 36% say it helped them save more for major goals.

“One-on-one personal coaching is employees’ most desired way to receive financial education and guidance,” PwC says. “Check that your financial wellness program allows employees to connect to a coach who can help guide them through decisions as they improve their financial habits. While most employer financial education programs focus mainly on better preparing their employees for retirement, employers may want to consider balancing those programs with tools and resources that help employees achieve financial stability in the near term, starting with ensuring they have sufficient savings set aside to address an unexpected expense or emergency.”

PwC suggests that employers speak with their employees about their financial concerns in order to design a financial wellness program that will be meaningful for their employee base.

The PwC report can be downloaded here.