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More Than Half of Americans Say Personal Finance Makes Them Anxious
Despite the strong economy, personal finance is still a major stressor for Americans. According to the 2018 National Financial Capability Study (NFCS), more than 53% of Americans state that thinking about personal finances causes them anxiety. The study also reveals that single women are more likely to feel anxious about financial planning than single men.
The major causes of financial anxiety include:
- Insufficient money for retirement
- Medical costs for emergency
- Paying for medical insurance
- Paying for children’s college
- Paying rent or mortgage
- Maintaining a standard of living
- Paying regular bills
- Making minimum credit card payments
The Dangers of Financial Anxiety
Two of the most common effects of financial stress are anxiety and depression. These, in turn, lead to other harmful symptoms such as:
- Insufficient income for self-care: When personal budgets become strained, people have less money to pay for basic expenses and necessities such as food, healthcare, and utilities. If these problems go unchecked, they soon escalate into much larger problems, increasing anxiety.
- Loss of sleep: When people are under financial stress, they often have difficulty sleeping. If they suffer from insomnia for a prolonged period, this will soon begin to hurt their immune functions and their cognitive abilities.
- Unhealthy emotions: Financial anxiety and debt worries often lead to unhealthy emotions, which threaten physical and mental health. This type of anxiety can lead people to feel frustrated and hopeless, which can lead to depression as well as additional stress.
- Unhealthy coping behaviors: Financial anxiety is difficult to deal with. Sometimes people use unhealthy coping strategies, such as drinking, smoking, or overeating to ease their anxiety or to help them forget about their concerns. These behaviors tend to increase stress even more.
All of these symptoms very quickly begin to affect employees’ ability to function adequately at work. Workers begin to lose the ability to concentrate. Their level of engagement can lower, which could increase their risk of injury to themselves or others in some work environments.
Symptoms of financial stress also lead to tardiness and frequent absenteeism. All of these factors affect businesses every day, reducing productivity and costing employers money. Teaching personal finance and money management can increase employee satisfaction and your company’s overall productivity. Financial literacy and capability is never too late to learn and can help your staff set and reach their long-term goals.
Understanding Financial Capability
Financial capability encompasses the knowledge and skills which empower an individual not only to be able to manage personal finances but also to have the motivation and confidence to do so. The concept of financial responsibility is beginning to replace the more traditional notion of financial literacy, which has focused on the acquisition and development of money management skills.
Obviously, people need to understand healthy management practices, such as budgeting and saving, but they also need to be able to put that knowledge into practice. But financial capability goes beyond that. It also highlights motivational factors for improving financial health and indicates barriers which may block this motivation. A financially capable person is one who can make financial decisions that are the best fit for their current life circumstances at their particular stage of life. This involves:
- The ability to recognize the value in managing finances proactively
- Knowledge of how to make appropriate financial decisions and carry them out
- The skills to turn financial knowledge into practice
- Access to resources which will enable this
The two main factors to achieving financial capability are financial education and a motivating environment.
How Financial Capability Can Save the Day
Financial capability is crucial to maintain financial wellbeing because it enables people to manage their personal finances both now and in the future. For example:
- Present financial management: making ends meet today, paying bills, buying a house, paying credit cards, car loans, etc.
- Future financial management: planning for retirement, saving money, preparing for a financial emergency, etc.
Highlights From the NFCS
The NFCS is a large-scale project that spans several years. Its purpose is to measure American adults’ capacity to manage their personal finances. The study is commissioned by the FINRA Investor Education Foundation, in tandem with the U.S. Department of the Treasury and several other federal agencies. This study was first conducted in 2009. Since then, it has been repeated every three years. Each time it has been conducted, the NFCS has widened the number of topics it draws upon, to ensure that its research is relevant to the current financial climate.
The 2018 NFCS examined four particular components. These were:
- Making ends meet
- Planning ahead
- Managing financial products
- Financial Knowledge
One of the most important things to note from the 2018 NFCS is that financial education was shown to have a direct correlation to financial capability. This means that the more financial education a person has, the more financially capable he or she is and the less financial anxiety he or she suffers. When it comes to financial decision-making and money management, those with personal financial knowledge already have an advantage when it comes to financial wellbeing.
This is a valuable piece of information for employers and HR managers because it gives them the means to improve their employees’ financial wellbeing, reduce financial stress, and increase employee engagement and loyalty in the workplace.
How TrueConnect Can Help
TrueConnect offers safe, affordable loans for employees who are struggling with financial difficulties. This service offers employees an alternative to predatory lending products. TrueConnect’s technology-driven solution has several advantages, including:
- Access to a safe bank loan
- No credit check is needed to qualify
- Access to free financial counseling
- A safe alternative to predatory lending
- Alleviates employees’ financial stress
- User-friendly online applications
- Automated loan repayments
- Meets and exceeds all regulatory banking requirements
TrueConnect also goes a step further. Our team understands the negative impact that financially stressed employees have on your company. The problem is, you may not even be aware that this is happening. To help you recognize the signs, we have developed a financial wellbeing webinar. The webinar, which can be downloaded from our website, can benefit you by showing you how to avoid:
- Inefficiency caused by distracted employees
- Employee health issues worsened by financial stress
- Increased employee turnover
The webinar provides you with easy solutions to quickly spot signs that your employees may be having financial difficulties and give you a great solution for their problems without costing you a penny.
Don’t let employee financial anxiety affect your workforce. Help your employees build their financial capability and reach their financial goals by calling TrueConnect today to find out if your company is eligible for our employee loans.