Financial Worries Can Affect Employee Productivity

A significant number of employees are acutely worried about their financial situation, and this money-stress negatively affects their workplace performance, a recent study has suggested. But a report by financial counseling call center Financial Finesse indicates that employees may be getting better at handling their finances.

Thirty million—or one in four—American workers are suffering serious financial distress, and are dissatisfied with their personal financial situations, according to a study by E. Thomas Garman of Virginia Tech University. Nearly 30 other academics and personal finance experts found that depending on their place of employment, 30% to 80% of employees spend time at work worrying about personal finances and dealing with financial issues instead of working.

Many financially distressed workers admitted they take time away from work to talk with co-workers about personal financial problems, to communicate with creditors about past due payments, pay personal bills, balance their checkbooks, or to talk to lenders about debt consolidation. Because of these distractions, the report said, financially troubled workers are often unable to carry out their normal responsibilities, have to cut down on their workload, and are not able to accomplish as much as usual.

Between 40% and 50% of these financially-distressed workers claimed that their health had been negatively affected by their money concerns. Researchers found that people with financial problems faced mental stress that often led to or aggravated depressive or anxiety disorders. In addition, many people in this group said they worried about health care costs and medical bills.

"It’s an ugly situation for employers when more and more of their workers are distressed about their personal finances and running hard just to keep their heads above water financially," said Garman. "These findings should motivate employers to offer employees access to resources, counseling and advice to decrease their stress about money matters and improve their financial lives."

There are, however, indications that financial stress among employees may be waning as the economy improves and workers gain more access to financial advice. Financial Finesse reported that the percentage of calls to its call center regarding debt declined from 42% in 2003 to 39% in 2004. Over the same period, the number of calls from workers seeking guidance on budgeting and saving increased slightly from 16% to 17%, and calls regarding investing rose from 2% to 3%.

Financial Finesse recommended that employers provide basic money management education for their employees, but also offer resources to aid them in long-term financial and retirement planning.