New data contained in the annual Workplace Financial Wellness in America report, published by Financial Finesse, paints a picture of broad unmanageable financial stress, with the highest levels reported among Black and Hispanic Americans and single parents. In the following, I will discuss how we got here, the future implications involved if left unaddressed, and how tailored solutions can help reduce it.
Where are we now and how did we get here?
We have been living through extraordinary times for almost 3 years. Covid19, various societal crises, and persistently high inflation have inevitably caused strain and amplified existing systemic inequalities. Although salaries have risen, they have not kept up with inflation.
As reported by Champion Health in The Workplace Health Report: 2023, 76% of employees experience moderate-to-high stress, and 37% cite financial pressure as their top cause of stress outside of work. According to the Financial Finesse report, 27% of workers are experiencing high or overwhelming levels of financial stress, most of which falls on single parents who were almost 4 times as likely to experience unmanageable stress than married couples without children. The increase in financial stress is also contributing to a decline in total wellbeing. In just two years, Mental Health America saw a 500% increase in mental health screens with anxiety and depression screens accounting for more than half of all screens taken in 2021.
Implications and Potential Consequences
Left unchecked, these elevated levels of stress have a significant impact on daily functioning and productivity. As previously mentioned, they cause higher instances of anxiety and depression in addition to memory and concentration impairment, sleep problems, headaches, weight gain – the list goes on.
A recent study by the American Psychological Association (APA) found that 27% of adults feel so much stress they cannot function most days, with about one in five reporting increased forgetfulness, an inability to concentrate, or difficulty making decisions. This implies a serious detriment to not only individuals’ personal lives but impairment to their ability to be productive and high performing at work.
This persistent feeling of worry about money is referred to as financial precarity. Studies on the cost of financial precarity find that it has detrimental impacts on decision making and other key skills needed in various jobs. For example, truck drivers, farmers, healthcare workers, and students with elevated levels of financial precarity suffered performance loss relative to those with lower levels.
Tailored Solutions
Solutions exist that have proven to reduce financial stress and improve financial wellbeing on a mass scale. The first is the implementation of advanced AI-powered technologies like the virtual financial coach AIMEE™, launched by Financial Finesse in 2021. This platform has led to an increase in actions taken, and real financial stress reducing results in the areas of managing cashflow, saving for emergencies, and preparing for retirement.
The second is the combination of Live Financial Coaching with virtual coaching. Where virtual coaching provides a great way for employees to access financial wellness resources, the most effective means of transforming financial behavior, as demonstrated by the results, is through live coaching.
Lastly, when you partner with Employee Resource Groups (ERGs) to create a customized, holistic financial wellness benefit that addresses the root causes of financial stress for members of these groups, you begin to make meaningful changes in addressing wealth and wellness gaps. The numbers speak for themselves.
In conclusion
We as a country are in a very vulnerable financial and mental health state, especially within historically marginalized and disadvantaged groups in our society. The pandemic, along with inflation and other crises have only shined a light on a problem that was already too big to ignore. The silver lining is that something can be done that has proven to be effective in addressing these issues. By incorporating a high-tech, high-touch approach to delivering financial coaching through affinity groups as part of a holistic wellness offering, employers have an opportunity to help usher in a new era of financial resilience, security, and wellness for all.
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