Financial Distress: Definition, Effects and Measurement

This paper describes the concept of financial distress, estimates of financially distressed workers in the U.S., development and use of a scale to measure financial distress, and implications for employers, financial educators, and practitioners. Financial distress can be defined as a reaction, such as mental or physical discomfort, to stress about one’s state of general financial well being. In particular, this includes perceptions about one’s capacity to manage economic resources (such as income and savings), pay bills, repay debts, and provide for the needs and wants of life.

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