According to the Federal Reserve Board, Americans amassed in 2008 an average of $8,565 in personal debt per household. This level of debt is up 22 percent from year 2000. This significant increase in debt is in part due to high interest rates on credit cards, higher costs for education loans, unregulated home mortgage lending practices, and a reduction of income caused by reduced work hours or job loss of a family member.
An American Psychological Association survey found that most Americans are stressed and anxious about their financial situation. The majority of employees have concerns about financial issues and a growing number have serious money problems affecting their ability to pay for gas, health care, rent or mortgage, food, and credit card debt.
Causes of Personal Financial Distress
The main sources of personal financial trouble come from the following general areas:
Life Events. Major events and emergencies that deplete personal savings and significantly diminish cash flow include accidents, illnesses, loss of employment, divorce, lawsuits, and natural disasters.
Lack of Financial Literacy. A lack of understanding about how to manage and save money or create and follow a household budget, resulting in abuse of credit cards and living beyond one’s means.
Psychological Factors. Behavioral problems that contribute to money problems include impulse buying and excessive spending due to addiction to alcohol, drugs or gambling.
Income Stagnation. There has been stagnation in the inflation-adjusted real income of the majority or workers resulting in increases of taking on personal debt, home equity loans or other credit obligations.
Health and Work Consequences of Employee Financial Distress
According to a Consumer Credit Counseling survey, those employees who are seriously distressed by their personal financial situation spend 13% of their workday dealing with money matters. Many resort to excessive alcohol and prescription drug abuse and other unhealthy methods of coping with their troubles. These behaviors pose potential costs to the organization in terms of productivity, safety, health care costs and absenteeism.
According to a Consumer Credit Counseling survey, those employees who are seriously distressed by their personal financial situation spend 13% of their workday dealing with money matters.
Employer Plan of Action
Research has shown that employees value financial education and that they benefit from these services by making better financial decisions. The research also shows an emerging link between financial education and counseling with improved employee health, work performance, and attendance. (Source: American Psychological Foundation, Partnership for Workplace Mental Health, 2009)
PAS as a Resource
PAS coordinates a network of financial trainers who provide practical, on-site presentations for employees and family members. Participants learn to:
Set or re-evaluate financial goals
Identify spending leaks and ways to save money
Prioritize and develop a spending plan
Find cash to pay down debt
PAS’ training sessions are designed by Consumer Economics Specialists with degrees in consumer economics who have also developed publications and seminars on financial management, estate planning, investments, retirement planning, insurance, and first time home-ownership. The trainers also remind participants to contact PAS to speak with a professional money coach for ongoing assistance with their personal financial plan.
CONTACT: [email protected] or 1.800.356.0845.
This article is not intended to be construed as legal advice, but is provided as an overview of good business practices.
PAS-It-On © 2009 by PAS and HRS, Inc. 9735 Landmark Pkwy., Ste. 17, St. Louis, MO 63127-9968