Financial Stress – Serious Effects On Employees And Employers by Financial Finesse
Key findings from the study were:
- Financial stress has negative effects on employees, which is costing their employers. Here’s a link to an infographic summarizing these effects: See below.
- Cash management is the primary underlying factor in determining an employee’s financial stress level.Employees who have manageable financial stress generally exercise good money management behaviors, with most having a strong financial foundation in place to achieve longer-term financial goals. Unmanageable stress levels, however, reflect a sense that one’s finances are out of control, and that there is little hope for turning things around. Generally, these are the employees who are living paycheck to paycheck, with expenses exceeding their incomes and/or with large debt balances and no emergency savings.
- Women’s stress levels seem to be impacted more than men’s by the presence of minor children in the household. Eleven percent of women with minor children reported having overwhelming levels of stress, compared to only 6 percent without children. Men’s stress levels seem to not be significantly impacted by the presence of minor children, as only 6 percent of men with children in their household reported overwhelming levels of financial stress, compared to 4 percent of men without children.
New Study Sheds Light on Prevalence of Financial Stress Among Employees and Its Toxic Effects
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El Segundo, Calif. – U.S. employees who do not have a handle on their day-to-day expenses are more likely to experience unmanageable financial stress than those who do, according to a study released today by Financial Finesse – a financial wellness firm that serves more than 600 companies nationwide by offering financial coaching to over 2.4 million employees as a no-cost workplace benefit.
The annual Financial Stress Research study identified cash management as a primary underlying factor in determining an employees’ financial stress level. The cash management divide is wide, with employees making up two main groups: those dealing with manageable financial stress levels (some or none) and those with unmanageable levels (high or overwhelming). Employees who have manageable financial stress generally exercise good money management behaviors, with most having a strong financial foundation in place to achieve longer-term financial goals. Unmanageable stress levels, however, reflect a sense that one’s finances are out of control, and that there is little hope for turning things around. Generally these are the employees who are living paycheck to paycheck, with expenses exceeding their incomes and/or with large debt balances and no emergency savings.
Manageable vs. Unmanageable Financial Stress
|HAVE A HANDLE ON||80%||36%|
|PAY THEIR BILLS ON||95%||67%|
Liz Davidson, CEO and founder of Financial Finesse says the only way to address unmanageable financial stress is to help employees get a handle on what they’re doing with their wallets every day. The firm’s Think Tank of CERTIFIED FINANCIAL PLANNER™ professionals recommends employers use Financial Finesse’s C.A.L.M. Financial Stress Reduction Model™ as a standard in their financial wellness efforts to help employees get a handle on their cash management:
C – Create a plan to manage cash flow, working with a coach if necessary
A – Automate bill payment & saving for emergencies
L – Lower nonessential spending and debt
M – Make progress one step at a time
The C.A.L.M.™ Model is particularly helpful for women in the workforce, says Davidson, as they are at heightened risk of unmanageable financial stress compared to men. At highest risk are women under the age of 30 who have minor children at home and make under $60,000 a year—with a whopping 54% reporting high or overwhelming financial stress.
This level of financial stress is expensive, both to employers and employees. Stress has been linked to unhealthy habits like overeating, and unmanageable levels of financial stress can lead to serious health issues. An AP-AOL Health Poll found that people experiencing high stress caused by debt are more likely to struggle with depression, anxiety and heart problems than people with low levels of stress caused by debt. They also experience more relationship issues and substance abuse problems. The direct blow to employers comes in the form of lost productivity, increased risk of on-the-job accidents and absenteeism. If this epidemic continues to grow, Davidson says companies could be facing a much bigger dilemma where financial stress is so widespread in the workforce that it will be difficult to reverse.
Fortunately, treatment for financial stress is becoming more common in the workplace. According to a report by Aon Hewitt, 89% of employers are very or moderately likely to implement or expand programs to help employees better manage their money as part of their overall benefits package. Linda Robertson, CFP®, ChFC®, CEBS, MSFS, Senior Resident Financial Planner with Financial Finesse and lead author of the report, says the greatest demand is for one-on-one financial coaching. According to Robertson, “employees who work with a financial coach are more likely than those who engage exclusively online with financial wellness programs to have a handle on their cash flow, to have an emergency fund, and to pay bills on time.” She adds: “They’re also more likely to be on track for retirement and to feel confident in how they are invested, which is a stress relief in and of itself.”
About Financial Finesse
Financial Finesse provides unbiased financial guidance and education to employees through their employers, delivered as comprehensive financial wellness programs. Its education is proven to improve employees’ financial security and provides a clear return on investment for their employers in productivity, absenteeism, health care costs, and more. All programs are customized and holistic, delivered by CERTIFIED FINANCIAL PLANNER™ professionals who do not sell any financial products or manage assets. Its multi-channel education approach offers a variety of channels such as live workshops, webcasts, one-on-one financial counseling sessions and a financial helpline—reaching over 2.4 million employees at over 600 companies. www.financialfinesse.com
Financial Stress Has Negative Effects On Employees, Which Is Costing Their Employers
2016 Financial Stress Research
Money continues to keep American workers up at night. Financial stress levels are relatively unchanged for most employee demographics since 2014. Most employees continue to worry about their personal finances, with 25 percent of employees that took a financial wellness assessment in 2015 indicating high or overwhelming financial stress. About one-third were assessed as vulnerable to living beyond their means and having serious debt. It is no surprise that money was reported as one of the top sources of significant stress, according to this year’s Stress in America™ survey commissioned by the American Psychological Association (APA).
With 85 percent of employees reporting at least some level of financial stress employers should be on the alert that their workforce could be losing sleep due to worrying about money. Based on a recent survey conducted by Creditcards.com, 6 in 10 adults lose sleep over at least one financial problem, with women tending to worry more and sleep less. Arianna Huffington believes we are in the midst of a sleep deprivation crisis. Tired workers have less focus, come to work grumpy, and are easily distracted. That costs workers on average 11.3 days of productivity a year, according to the America
Insomnia Survey. Due to the potential risk of lost productivity, EBN looks ahead to corporate sleep programs being the next frontier of workplace wellness. To help employees sleep better at night, a focus on financial wellness can be part of the solution.
Women are more likely than men to report feeling overwhelming financial stress. Even in combination with age, income, and the presence of minor children, gender played a major role in the level of stress reported by users. As we noted in last year’s Financial Stress Report, mothers with minor children living in households with income below $60,000 (9 percent of the total sample) are the most financially stressed. According to our findings:
- Nine percent of Millennial women under age 30 reported overwhelming financial stress compared to 5 percent of their male counterparts.
- Lower-income males (making under $60,000 a year) were more likely than lower-income females to report no financial stress, at 13 percent versus 9 percent.
- Women’s stress levels seem to be impacted by the presence of minor children in the household. Eleven percent of women with minor children reported having overwhelming levels of stress, compared to only 6 percent without children. Men’s stress levels seem to not be significantly impacted by the presence of minor children, as only 6 percent of men with children in their household reported overwhelming levels of financial stress, compared to 4 percent of men without children.
2015 Breakdown by Age/Gender:
Pre-retirees (age 55+) also have financial stress levels that are lower than the average, with 23 percent indicating they have no financial stress—a good place to be heading into retirement. However, there are still a significant percentage of pre-retirees who are heading into retirement with uncomfortable levels of debt (28 percent), no emergency savings (33 percent), and uncertainty about their retirement preparedness (50 percent).
2015 Breakdown by Income/Gender:
While increased family income is correlated with a reduction in financial stress, it is noteworthy that employees from higher-income households still experience financial stress, although they are not as likely to have high or overwhelming financial stress. Seventy-seven percent of men and 83 percent of women in households making $100,000 or more have financial stress, with 13 percent and 17 percent, respectively, having high or overwhelming levels of financial stress.
2015 Breakdown by Family Structure/Gender:
Ninety-one percent of women with minor children say they have financial stress, with 36 percent saying their financial stress levels are high or overwhelming.
2015 Breakdown by Marital Status/Gender:
High levels of financial stress can put a strain on couples. With 22 percent of married employees reporting high or overwhelming financial stress, this could be a huge obstacle to the success of their marriage. The APA found that 31 percent of spouses and partners say that money is a major source of conflict in their relationshipv. Financial stress usually becomes magnified as a marriage unravels, and the International Foundation of Employee Benefit Plans (IFEBP) recently mentioned the research of Jay Zagorsky, which found that wealth begins falling four years before a divorce and can reduce a person’s net worth by 77 percent. From an employer’s perspective, this points to the possibility of administering a qualified domestic relations order (QDRO) on the retirement plan or child support garnishments on payroll.
See full PDF below.