Tackling financial stress: Workers are in ‘crisis mode’ (and need solutions)

A survey of more than 34,000 people shows the heightened financial-based stress that American workers are feeling in an uncertain economic climate.

The survey from Financial Finesse, an independent provider of workplace financial wellness programs, found that 13% of respondents said they were in crisis mode – behind on bills and struggling to meet basic needs – and another 64% identified themselves as struggling – trying to get a handle on debt, cash flow and saving for emergencies. Meanwhile, the percentage of financially resilient workers dropped from 37% in 2021 to 32% in 2022, reflecting the pressure of inflation on household finances, according to a report, “Workplace Financial Wellness in America,” that accompanied the survey.

Those who reported a high or overwhelming level of financial stress rose from 20% in 2021 to 27% in 2022. Of particular interest to advisors, said Liz Davidson, CEO of Financial Finesse, in a webinar about the report, was that those who said they worry about the U.S. economy, the stock market and how it will affect their financial future rose from 38% to 43%.

“That’s a very meaningful change,” Davidson said. She said the U.S. is in a “troubling period” financially that is marked by inflation, higher interest rates, uncertainty and concerns about how the economic climate could worsen. The result is that many people have basic, immediate concerns, such as “How do I pay the bills?” alongside worries about what the future holds.

“That’s a tough dynamic,” she said. “The human brain is not wired for stress on an ongoing basis, but it’s also not wired for uncertainty.”

Related: Financial stress weighing on your workers? Prioritize financial wellness training

Greg Ward, director of the financial wellness think tank at Financial Finesse, noted it was “troubling” that 13% of respondents identified themselves as being in the “crisis” category, the highest level of financial stress that indicates that they are worried about paying for necessities and their day-to-day bills. Ward said that number historically has been at just 5 to 6% of the workforce. Ward said female, Black and Hispanic employees make up a disproportionate percentage of the employees in the crisis category.

With that in mind, Davidson said it is important for employers and those advising employers to recognize that one size doesn’t fit all when it comes to financial wellness – for instance, 57% of single parents reported feeling unmanageable financial stress versus 15% of those who are married with no children.

“You don’t have one workforce,” Davidson said. “You have many different workforces. And if you look at it that way, then you really see the importance of targeting employees appropriately with the right education at the right time based on their needs.”

That means meeting people “where they are with the right communications, benefits, interventions, campaigns, technology, education and coaching makes all the difference in the world,” Davidson said. “I think everyone wants to feel seen and heard and understood. The reality is we are all so unique in what our individual challenges are.”

Ward noted that the newest generation entering the workforce wants “to see themselves in the benefits.”

“They’re looking for personalization,” Ward said. “They want to know what their employer is able to do for them. There is an expectation that the employer is going to support their mental, physical and financial health, and most HR professionals agree it’s a responsibility of the employer.”

Davidson said one “absolute best practice” is working with employee resource groups (ERGs) to help identify the most pressing financial concerns for a workplace’s team members and then tailoring financial wellness offerings to address those – through that effort, a sense of “co-creation” helps create buy-in while leading to offerings that are more impactful for employees.

Davidson said an effective, growing trend is putting forward financial role models. As an example, she pointed to Financial Finesse’s work with the NFL Players Association and the increasing number of players who are speaking about the importance of being financially responsible.

“We’re starting to see this groundswell of people that really have been through the process of financial coaching and seeing the impact that can have on their current situation or their future goals and saying, ‘This is something that we should be talking more about,’” Davidson said. “They’re willing to share their stories, they’re willing to advocate. And when they do it, they’re more likely to continue their own progress. So it’s an excellent, excellent vehicle if you have employees that really want to share their stories. It’s excellent for them. But it’s also excellent for people that might not be quite as comfortable initiating a coaching process. We can talk to them all day long as employers or as the financial wellness vendor about how important this is, but when they hear it from someone whose story resonates with themselves, that’s infinitely more powerful.”