Financial Stress Costs Organizations and Their Employees Big Money

The annual cost of financial stress in the workplace is more than $400 per employee.

“Thirty million workers in America – one in four – are seriously financially distressed and dissatisfied with their personal financial situations.”

This was the alarming finding in a 2005 joint report of business experts and academic scholars from 10 universities that documented financial distress among America’s workers:

“It is an ugly situation for employers when more and more of their workers are distressed about their personal finances and running hard just to keep their heads above water financially,” says Dr. E. Thomas Garman, Professor Emeritus, Virginia Tech University

Financial distress is a workplace issue because many workers who struggle with money problems are less productive on the job:

•    They worry about paying bills.
•    They use too much credit and often believe they will never catch up financially.
•    They are insecure about their financial preparation for retirement.
•    They lack confidence about their ability to manage their money.
•    People at all income levels in society experience financial distress.

Depending upon their place of employment, 30 to 80 percent of financially distressed workers spend time worrying about personal finance and dealing with financial issues instead of working.

A separate study concludes that the first-year return on investment for education that improves a worker’s personal financial behavior exceeds $400 per employee, achieved through:

•    fewer absences from work
•    less time spent at work dealing with personal financial matters
•    increased job productivity

What Can Employers Do?

Employers can help by providing access to resources, counseling and advice to reduce the financial stress and improve the financial quality of life of their employees. But there’s no need for employers to get into the credit counseling business.

The most cost-effective way to help is through partnerships with organizations - such as InCharge® Education Foundation - that already are well qualified and experienced in providing personal finance education for employees and unique groups of consumers.