“The secret of getting ahead is getting started.”
-Mark Twain
Financial Stress
If you are stressed about money issues, you are not alone. Even the word money provokes extreme emotions in most people. Many refuse to talk about money, even in marriage; it tends to be a taboo subject similar to religion, politics, or sex. In fact, some don’t even like to think about or deal with money and do their best to avoid it. If this describes you, you are not alone. Money is intensely personal and highly charged. The talking heads of the financial sector do their best to make money and finances seem complicated and difficult. Because of this, more than half of American workers are stressed about their finances. In a survey done by GOBankingRates, they found that debt was the most common cause of financial stress in America for 2016 and 2017. Sometimes people find themselves in debt because they don’t have enough income to meet the most basic needs. Most people however, are in debt because they spend money they don’t have on their wants, possibly masquerading as needs.
Everyone wants to improve their quality of life. Quality of life improves as we have less negative stress and more peace in our life. As we mentioned, money provokes extreme human emotions. One of those emotions is fear. When asked to identify their biggest money fear, adults in the US said their #1 money fear was never being able to retire. Running out of money in retirement is becoming increasingly more prevalent in today’s society where one in three baby boomers have less than $1,000 saved! Gone are the days when workers would remain with a company most of their career and then retire with a pension. Similarly, Social Security wasn’t meant to pay for a 20 to 30-year retirement. It was created during the Great Depression, when life expectancy was 62 years old. Social Security didn’t even kick in until age 65! It was intended to supplement an existing retirement, not replace it, and would only cover the most basic needs. With the possibility of being retired for 20 to 30-years, you need to have a game plan. Understanding some basic principles will get you on track for a comfortable retirement and will bring peace where before you felt fear.
American’s #2 money fear is always living paycheck to paycheck. Whether you make $300,000 per year or $35,000 per year, living paycheck to paycheck is an issue. How can that be, you might ask? Because our expenses tend to grow to fill our income. Our desires and wants are always looking to the next level of wealth or achievement so any increase in pay, bonus, or tax refund, we already know how we will spend it. Most of us look at our income and think, “If I could only make $xxx more each month, then I would be fine.” But, what we find out is that once we get the raise and have the extra money, we are STILL living paycheck to paycheck and barely making ends meet. Why??? Because we don’t control our spending! Improving our financial situation is usually more about decreased spending than increased income. We know we should save and invest for the future but it seems so far away and besides, we don’t really trust the market. We know we should opt in to our employers 401(k) program where they match a certain percentage, but we just don’t have the money right now…maybe when we get a raise. Part of the issue is that many have a fear of losing all their money in the stock market. In fact, fewer than one in four trust the financial system. Because of this there are fewer people benefiting from the power of compound interest in the stock market than in previous years. Even Millennials are less likely to invest in the stock market due to their fear and lack of understanding on how the market works. The problem is that in order to not run out of money in retirement, the #1 money fear, we need to invest in the stock market. There are easy to understand ways to invest in the stock market where you have less risk in losing money while benefiting from the upside of the market. We share this blueprint to companies desiring to invest and empower their employees.
The truth is, we aren’t rational beings when it comes to the emotionally charged topic of money. In the relatively new field of behavioral economics we learn that we don’t always make the rational choice when it comes to money. If we did, we would invest all the money we could as early as possible once we learned the power of compound interest. Even Albert Einstein said, “Compounding is mankind’s greatest invention because it allows for the reliable, systematic accumulation of wealth.” Behavioral economists have found that small, simple adjustments that are automatic make the difference between dying broke or retiring in comfort. Many intelligent people steer clear of financial issues because the issues seem overwhelming and complicated and they feel confused. Our company provides research-based programming on holistic financial wellness that leads to less stress, less fear, and increased productivity at work. Our programs benefit the employee as well as the employer.
Why Financial Wellness?
Both the business and academic communities agree, Financial Wellness Programs are beneficial to both employers’ and employee’s bottom line. Indeed, the power of Financial Wellness Programs can be demonstrated in their explosive growth. Financial Wellness Programs began in earnest in the 1980s and by 1994 it is estimated that 88% of larger employers offered Financial Wellness Programs in some form or another, although most of these were very basic and only covered insurance and retirement. Who offers a more holistic range of Financial Wellness Programs? Major corporations like Walmart, Staples, GE, and even the United States Armed Forces have programs, just to name a few.
Business Research and Academic Scholarship have identified important links between employees’ financial stress and organizational performance. We know that when employees are under financial strain they are more likely to have poor attendance, reduced performance while at work, and are even more likely to engage in unethical behaviors. Nearly 1 in 3 employees report that issues with money have been a distraction at work with an average of 13 hours per month spent worrying about money while at work. Financial stress has also been linked to serious problems in employees’ physical and mental health.
Why Financial Wellness Matters for Employers
For employers, Financial Wellness Programs have been shown to increase employee organizational loyalty/commitment, labor performance, productivity, job satisfaction, and employee morale. In addition, a considerable amount of research finds that Financial Wellness Programs improve participation in 401(k) and other retirement programs. On the flip side, investing in employee financial wellness reduces distractions, lowers absenteeism, lowers stress, and reduces health insurance costs. Lastly, Financial Wellness Programs are linked to positive community perceptions and are regularly used as a branding and recruitment tool!
Why Financial Wellness Matters for Employees
Financial stress is the number one source of stress in America. In addition to reductions in workplace performance, financial stress is associated with 3 times the digestive tract problems, double the rate of heart attacks, and associated with 44% more migraines in employees when compared to employees without financial stress. In its most serious cases, financial stress can be linked to substance abuse and ethical misconduct among employees.
For employees, Financial Wellness Programs offer an abundance of benefits. Holistic Financial Wellness Programs provide employees with short and long-term financial skills, so they can reach retirement and personal savings goals. Holistic programs have also been linked to career advancement, improved borrowing skills, better use of current employer offered benefits, less debt, and most importantly, better overall physical and mental health. So, one answer to improve quality of life is to implement a holistic financial wellness program in the workplace. Both employees and employers will be glad they did.