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Build a house on a crumbling foundation, and you'll have problems. The same can be said for building a career on a poor financial footing.
It may work for you in the short term, but over the long haul, forget it. The pressure of money-related financial stress will, at best, interfere with job performance. At worst, it could destroy a career.
An equal opportunity career killer
“Money problems are stressful. Stress is debilitating. Together, they can affect job performance,” said Ted Kane, a partner at the benefits advisory firm Brown & Brown.
“We work with many large employers concerned about the physical, mental, and financial well-being of their employees. Of the three, financial stress often affects the greatest number of employees and is exacerbated by the pandemic and current state of inflation. Regardless of income, employees worried about money are distracted at work, less productive, and more prone to stress-related illness.”
That’s why financial wellness is so important.
- It’s a critical consideration for younger workers fresh out of college, likely strapped with student loans, and trying to start their careers.
- It’s essential for those climbing the corporate ladder while perhaps starting a family or moving into a new home. Or both.
- It’s important for the established professional who may be considering a career change before letting their foot off the gas pedal with the hope of moving toward retirement.
In other words, all workers, no matter their age or experience, should consider the perils of poor finances as they advance through different stages of life — and their career.
Fallout of poor finances
Many factors — the rising cost of living, debt, emergencies — can contribute to money-related financial stress. Regardless of the cause, the effects can be the same.
“Financial pressure can lead to performance paralysis,” said Jesse P. Gilmore, PMP, PMI-ACP, a professional performance coach and founder of Niche in Control.
“When external pressures, like personal finances, take over one’s thoughts, people have a harder time getting into what is called 'flow state.' Flow state is simply allowing the moment to guide your actions without hesitation or doubt. Flow state is also what is necessary for peak performance. When someone is preoccupied with how they are going to pay their mortgage, for example, they are unable to stay focused on their work, and their work output suffers. This cycle can lead to worse conditions or even the loss of their job if not dealt with early.”
Additionally, when your finances are a mess, your life tends to be too. Relationships can be strained, making it twice as tough to concentrate. (Related: The link between financial stress and mental health)
And your appearance can suffer. Perhaps you cut way back on your wardrobe. Or go longer periods of time between haircuts and styling. In addition, you may defer maintenance on your car. Auto detailing and mechanical fixes become a luxury, not a necessity.
Career success and financial wellness
The subjective definition of career success can mean something different to everyone. But one common denominator makes that feeling of success easier or harder to achieve. And that’s your financial well-being.
When it’s in good shape, it gives you the freedom to be successful.
Here are 7 ways strong personal finances are critical to job performance and career advancement.
- Allows you to become a stronger job applicant. Imagine going through five job interviews at the same company. Everyone you interviewed with likes your credentials. They like how you present yourself. You’re pretty sure they’re going to make you an offer. Then crickets. You hear nothing. You wonder why. It could be because they ran a credit check and didn’t like what they saw. Keep in mind that more than half of employee background checks include a credit check as part of the hiring process.1 The healthier it is, the better. (Related: Improving your credit score)
- Gives you more time to search for the right job. Having enough savings to foot the bill on household obligations and expenses allows you to exercise patience. Patience allows you to hold off until the right job comes along.
- Lets you more easily walk away from a bad situation. It’s tough to perform well when you don’t like the work you do or the situation you work in. If your financial picture looks bleak, it’s tougher to walk away from it and improve your position. Healthy finances can be the getaway that lets you leave behind one job to pursue another.
- Gives you negotiating power. Solid financial footing can give you the flexibility and confidence to ask for what you think you deserve, be it a promotion or a raise. The consequences of a “no” are less likely to be dire.
- Provides an opportunity for self-improvement. Healthy finances can allow you to invest in things that make you a better performer or more attractive job prospect, like additional training or education.
- Lets you focus or recharge. Healthy finances allow you take the time for rest and self-care necessary to make your job performance shine. Conversely, those who need to increase cashflow may look to a second job or side hustle to make ends meet. But that does two things. First, it may take time away from doing a good job at your main job. Second, it may lead to burnout.
- Diversifies your earning potential. Healthy finances are gifts of confidence, time, and focus that carry over into your career. These gifts better position you to perform at a high level. That, in turn, sets you up for promotions and raises. And the more money you make, the more money you can invest. When the money you invest starts making money on its own, you’ve wisely diversified your earning potential.
Managing your finances
Achieving financial wellness can involve many different things, depending on individual circumstances. Basic steps involve having a budget, dealing with debt, establishing a safety net, and saving for retirement.
But as careers grow and circumstances change, new investment and estate planning strategies can come into play. Indeed, many opt to seek out professional help to manage their finances and understand their options as their assets grow. (Related: Financial security and the wellness wheel)
“Getting organized with your finances requires time and energy, especially at the start. However, it gets easier over time if you find people you can trust to help manage your money,” said Alex Krisak, a financial professional at Baystate Financial.
If you’re worried about your financial wellness, you’re likely losing focus and being less productive in the office. After all, financial stress can feel overwhelming and lead to performance paralysis. On the other hand, good personal finance can lead to better job performance and career advancement. And that, in turn, can help build wealth. That’s why establishing financial wellness is so important.
Discover more from MassMutual …
How to set up your first retirement plan
Top wellness benefits for employees
A closer look at 6 common financial rules of thumb
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