Despite improvement in their financial well-being, many employees remain worried
US employees’ financial well-being has improved, but many still live paycheck to paycheck, overspend and remain worried over the future state of their finances, according to a recent study.
Finding showed that 43% of workers are satisfied with their financial situation, an increase from 35% in 2017.
However, two in five employees still heavily depend on the month-end pay to survive.
The fallout from these financial problems can lead to a broad set of issues that negatively affect many workers’ lives, said Willis Towers Watson, who surveyed over 8,000 US employees.
Employee satisfaction with their finances has now recovered to levels seen only about a decade ago. Additionally, close to half (42%) said their financial situation has improved over the past two years. Another three in five (58%) believe their finances are heading in the right direction.
However, the survey revealed some worrisome findings:
- 38% of employees live paycheck to paycheck.
- 39% could not come up with $3,000 if an unexpected need arose within the next month
- 18% making more than $100,000 annually are also living paycheck to paycheck
- 70% are saving less for retirement than they think they should
- 32% have financial problems that negatively affect their lives
- 64% believe their generation is likely to be much worse off in retirement than that of their parents
READ MORE: HR's role in a recession
Steve Nyce, senior economist at Willis Towers Watson told HRD that the study shows how financial health is not just about income.
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“The impact of financial problems on employees’ health and stress, even for those who aren’t living paycheck to paycheck, is unmistakeable,” Nyce said. “Many employees are struggling with their financial situation even as the job market and economic conditions improve.
“Some employees struggle to pay for their basic needs, including healthcare, while others are falling behind in saving for retirement.
“No matter the source, financial stress has a negative impact on their lives, underscored by hampering their ability to perform effectively at work.”
The study shows that financial stress has a negative effect on employee productivity, engagement and overall health. This is especially true among “struggling” employees, identified as those who live paycheck to paycheck and have difficulty controlling spending.
About a quarter (27%) of employees were classified as struggling. Among them, more than one in three (39%) said money concerns keep them from doing their best at work.
Almost half of struggling employees (49%) reported suffering from stress, anxiety or depression over the past two years, compared with just 16% of employees without any financial worries. And only 39% of struggling employees were fully engaged at work.
READ MORE: Fear of recession sparks layoff anxiety
How leaders can help
The survey also found that providing employees with tools and resources can help boost their financial well-being. Employees (69%) who were given four or more access to several tools and resources said their finances were heading in the right direction – this compared with 51% who had no access to tools.
Similarly, two-thirds (66%) of workers with the most access to financial management resources said they helped meet their needs, compared to 39% with less access to resources.
Nearly as many (64%) respondents with the most access said the resources encouraged them to improve their financial situation, versus 40% with just ‘some access’ to tools or resources.