Too many working Americans are not saving enough money for a comfortable and financially secure retirement, according to a survey conducted by Financial Finesse. Half of respondents said that they do not even have an emergency fund in place, and a third reported that they have significant financial obligations (debt) and are living “beyond their means.” Unsurprisingly, a quarter of surveyed employees were found to currently be suffering from “high” or “overwhelming” levels of financial stress, and 60 percent reported having at least some level of financial stress at the moment.
That is a problem because chronic stress not only hurts the individuals experiencing it but also the companies they work for. Just look at the American Psychological Association (APA) study which estimated that stress in the workplace costs U.S. businesses $300 billion annually in the forms of reduced worker productivity, avoidable turnover, and higher medical expenses. Moreover, research from Willis Towers Watson found that 28 percent of surveyed employees who reported that they struggle with their finances admitted that it has translated into reduced performance at work.
Financially distressed employees were also found to have a higher rate of absenteeism (3.5 days per year) on average than non-stressed workers (1.9 days per year). One reason that people chronically suffer from money-related stress is because they simply are not sure how to deal with the financial challenges they are facing. For instance, the Financial Finesse study mentioned above found that 65 percent of financially distressed employees feel “overwhelmed” by their existing debt load, and 48 percent have no plan for paying down and eliminating the liabilities.
Given the high cost of stress in the workplace, many businesses have launched financial wellness programs for their employees. Such initiatives have been shown to be successful at improving general financial literacy and educating workers on ways to better manage their personal finances. Something else that may be able to help is working with a professional advisor because the Financial Finesse researchers found that employees who interacted with a Certified Financial Planner (CFP) were more likely to have a handle on cash flow management, regularly contribute to a retirement plan, and have an emergency savings fund in place.
Sources: Financial Finesse, Strategic Insight, APA, EBN, Willis Towers WatsonPost author: Charles Couch