COVID-19 has been shining a light on a deep-rooted issue that existed before the pandemic—US employees are overwhelmed by financial stress. PricewaterhouseCooper’s 9th annual Employee Financial Wellness Survey, conducted in January 2020, before the pandemic, revealed that 54% of employees feel more stress from financial challenges than other stressors–their job, relationships, health concerns, and other issues—combined. Easing the pressure involves first understanding the reasons for financial stress.
Causes of Financial Stress
- Financial Stress Spans Income Levels—According to the National Endowment for Financial Education financial stress is consistent across income ranges. While 79% of households with annual incomes of less than $50,000 reported concerns about their financial situation, NEFE found that the same percentage with incomes above $100,000 felt the same. Higher income doesn’t necessarily mean financial security.
- Financial Habits are Set Early—Syble Solomon, creator of Money Habitudes, says that family, personality at birth, personal experiences, culture, religion, and the media shape our financial habits over our lifetimes. By the time we’re in mid-adulthood, we’ve made decades of financial decisions based on these influences. And, we likely don’t fully understand the emotional influences of money.
- Lack of Sound, Consistent Financial Education—Generations of Americans have grown up without formal financial education. The typical young adult makes decisions about debt, employment, and other matters by their early 20’s, often without education in basic money management. These decisions set the foundation for future financial success.
Employees Bring this Stress to the Workplace
According to PwC’s 2018 Employee Financial Wellness Survey, financial stress affects employee productivity. Employees want help.
- 67% of employees find dealing with their financial situation stressful.
- 35% report that their financial issues have been a distraction at work.
- Nearly half of those distracted by money matters spend 3+ work hours a week thinking about or dealing with financial issues.
- 71% of employees who are offered financial support services use them.
A Comprehensive Solution
Arming Parents
Children learn what they know about money at an early age, and families are the biggest influence. So, the more knowledge parents have, the more they can share with their children. And the better equipped their children will be.
The Role of Schools
Schools play a role in every child’s life. Over the last decade, schools have increasingly offered personal financial education, but more needs to be done. As of 2020, 21 states require students to receive education in personal finance, but only six require a semester-long, stand-alone course. Increasingly, schools are preparing students to enter the adult world prepared to make financial decisions.
The Power of Employers
While we wait for schools to develop these programs, we have generations of adults ill-equipped to manage their money. Employers can fill this gap by making financial planning and education services available to their employees. As employees experience financial success, their stress will decrease and productivity will increase. They’ll also pass these healthy behaviors on to their children. This will create generational change resulting in a more-engaged citizenry and workforce who are secure in their financial footing.