Employees reporting unmanageable financial stress climbed an alarming 34% since last year, according to the new Workplace Financial Wellness in America report from Financial Finesse.
The annual snapshot of the American workforce through the lens of financial wellness is the flagship study from the Financial Finesse Financial Wellness Think Tank, analyzing employee financial stress and resilience levels, reporting on how workers feel about the state of their finances, the toll of financial stress on physical and mental health, and the role of holistic financial wellness programs to address these issues.
“The good news is, when employees receive ongoing financial coaching, most make dramatic improvements to their finances over a relatively short period of time.”
Liz Davidson
The rise in unmanageable financial stress reported in this year’s study, released today, was fueled by fueled by workers’ concerns about the U.S. economy and the ability to maintain control over their current financial situation. Forty-three percent of respondents said their greatest source of stress is the U.S. economy and/or stock market and how it will impact their financial future.
“Looking at today’s headlines, it’s no wonder that employees are facing such high levels of financial stress,” said Liz Davidson, Financial Finesse Founder and CEO. “As a society, we cannot ignore the serious consequences of high financial stress—including declining mental and physical health and decreased employee satisfaction and productivity. And with financial security in reach for nearly all American workers, we don’t have to. The good news is, when employees receive ongoing financial coaching, most make dramatic improvements to their finances over a relatively short period of time. This is why financial wellness programs are one of the fastest-growing employee benefits, second only to mental health programs. They truly transform both individuals and organizations.”
More key findings from the annual snapshot include:
- In 2022, Black and Hispanic populations were 38% and 28% less likely to have a positive cash flow than their White counterparts, respectively.
- Single parents report experiencing unmanageable financial stress most frequently (57%), followed by single adults with no children (28%) and married parents (23%). Married couples with no children were the least likely to report unmanageable financial stress (15%).
- The percentage of financially resilient workers decreased from 37% in 2021 to 32% in 2022, a direct result of the pressure of inflation on household finances.
- Employees who engaged in financial coaching achieved significant results: 89% of employees who adjusted their spending to save more for retirement are now saving enough to receive their employer’s full retirement match; 72% who adjusted their spending to save for goals are now saving regularly toward those goals; and 65% who created a plan for every paycheck to cover bills are now able to pay their bills on time.
- Custom financial wellness programs targeting employees of color have been particularly effective. One large-scale study tracking the impact of tailored programming and coaching for Black and Hispanic Employee Resource Groups found a 25% decrease in participants reporting high levels of financial stress and a 23% increase in employees who are considered financially resilient. Additionally, retirement confidence doubled.
Financial wellness is a journey that begins with tackling financial stress and building resilience. Financial resilience is defined as living within your means, having no high-interest debt, and maintaining an emergency fund.
“It’s unacceptable that a whopping 64% of the country’s workforce are living paycheck to paycheck without a financial cushion when we have solutions available to address this problem,” said Greg Ward, CFP, Director of the Financial Wellness Think Tank and one of the report’s authors. “It’s amazing to see the growth of employee financial wellness programs, but to truly restore upward mobility, especially to younger generations, we need employers of all sizes to coalesce around this issue and make it a central part of their commitment to their employees.”
For more information, download the full Workplace Financial Wellness in America report HERE. Download a snapshot of the impact of financial coaching on financially stressed employees HERE.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.