COVID-19 is shining a light on a deep-rooted issue that existed before the pandemic—US employees are overwhelmed by financial stress. According to PricewaterhouseCooper’s 9th annual Employee Financial Wellness Survey, conducted in January 2020, 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 underlying causes of financial stress.
Causes of Financial Stress
- Financial Stress is Prevalent Across Income Levels—Earning less than needed for basic needs is unsustainable, but financial stress is consistent across income ranges according to the National Endowment for Financial Education. 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. Those with higher incomes generally don’t feel more secure.
- Financial Habits are Set Early—Money habits and attitudes 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 without fully understanding 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 lay 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 and employees are asking for 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 finances spend 3+ work hours a week thinking about or dealing with financial issues.
- 24% of respondents report their employers offer services to assist with personal financial services and 71% of these employees use these services.
A Comprehensive Solution
Children gain much of their financial knowledge at an early age, and families are the biggest influence. The more knowledge and positive experience parents have and can share with their children the better equipped their children will be as young adults.
The Role of Schools
Financial habits and attitudes are established early, and schools play a role in every child’s life. Over the last decade, schools have increasingly offered education in personal finance 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 their personal finance programs, we have generations of adults ill-equipped to manage their finances. Employers can fill this gap by making financial planning and education services available to their employees. As employees learn to manage their finances successfully, not only will their financial stress decrease and work productivity increase, but they will pass these healthy behaviors on to their children.
As schools increasingly offer financial education, parents who take a more active role in their kids’ experiences can have more confidence in their children’s future success. Employers who support employee programs can address deep-rooted issues that quietly cut into worker productivity and arm parents with the knowledge they need to support their children’s financial education. This will create generational change resulting in a more-engaged citizenry and workforce who are secure in their financial footing.