The new year is well underway, and 77% of Americans have made a financial resolution for 2020 according to an article on WalletHub. But, the survey reports 80% of resolutions are dropped by the end of February.
With so many workers living paycheck-to-paycheck, financial stress is a widespread, silent epidemic in today’s workforce. The 2018-2019 government shutdown illustrated what going without pay can mean for employees. It highlighted how few Americans have the kind of savings that experts say they need to handle a crisis. In fact, only about 60% of Americans have enough savings to cover a $400 emergency expense.
Inevitably, an unexpected expense will occur, such as a major appliance that breaks down or a leaky roof that needs repair, a medical issue that requires a significant co-pay, or their college freshman’s laptop that needs replacing. And according to the 2019 PwC Employee Financial Wellness Survey, “not having enough emergency savings for unexpected expenses” was the top financial concern among employees.
The Cost of Financial Stress
The level of credit available to employees varies significantly and can be the source of financial stress.
The average consumer with subprime credit will pay about $200,000 more for credit over the course of their lifetime.
Short-term, small-dollar loans are often high interest but highly accessible – and extremely attractive to many Americans who are facing dire financial circumstances.
There are tangible and intangible costs associated with constantly struggling to bounce back from tough financial situations and poor financial decisions. Employee morale is just one of the outward signs of financial stress. According to the 2019 PwC survey, employees said that financial stress impacted their health (32%), relationships at home (32%), productivity at work (21%) and attendance at work (10%). Further, nearly 35% of employees said that finances were a distraction at work.
Employers can easily look around their workforce and realize they might not be able to identify which of their employees are financially stressed. Because debt isn’t something people talk about, it can be deemed a silent epidemic.
Help Employees with Their Financial Stress
While financial stress occurs in varying degrees for employees, many need some type of relief. What they need is financial flexibility.
Financial flexibility is the ability to manage expenses and make everyday life affordable. It is the financial stage between living paycheck-to-paycheck and financial security (a level relatively few employees may ever achieve).
Employers can do more to help. While financial education benefits are great to help employees with budgeting and retirement planning, companies also need to adopt voluntary benefits that provide employees the opportunity to have some financial flexibility for their needs. These voluntary benefits may include:
Low interest installment loans and credit
Student loan repayment benefit programs
Automated savings programs that encourage employees to save money each month from their paycheck
Employee purchase programs that allow workers to purchase consumer products and services through payroll deduction when they are unable or prefer not to use cash or credit
Can you Recognize the Face of Financial Stress?
Attend our upcoming webcast on Wednesday, Feb. 19, to better understand what financial stress looks like for today’s employees, and hear the stories of four employees who are in different stages of life, and have their own daily struggles. Learn more about financial flexibility and how it can help ease employee stress.