Financial Stress: The Great American Killer

According to the 2017 American Psychological Association study, “Stress in America,” money and work are the number two and number three sources of stress, affecting 62% and 61% of the population respectively. David Kilby, author of The New Productivity Engine, believes that “Money and work are amazingly intertwined. Stress from one negatively impacts the other, so you can hardly tell them apart.”

“Small amounts of positive stress play a vital role in motivation, adaptation, and our relationship and response to the world around us,” Kilby says in his book. “But excessive levels of negative stress can increase the risk of stroke, heart attack, high cholesterol, ulcers and depression.” Most tellingly he adds, “It can also lead to lost productivity on the job through presenteeism, absenteeism, accidents and illness.”

Two kinds of stress: One saves, one kills.

A hornet flies in your open car window on the expressway. Stress helps you maneuver to a safe exit and eject the critter. Then you calm down and carry on. This kind of short-term stress saves your life.

Stress over financial situations can last for very long periods of time. “It’s like your brain is keeping your body’s accelerator to the floor, and the engine is roaring round the clock even when it’s parked,” Kilby notes. “This kind of stress kills you.”

Employees use work time to solve personal financial emergencies.

According to different studies, about 75 percent of Americans do not have $1,000 available in case of an emergency. That means that a trip to the emergency room, a car problem, leaky roof or even a big credit card payment can trigger a high stress personal financial emergency. So, if Juan needs $976 today to deal with a situation, and he doesn’t have the money, what’s going to happen?

According to Kilby, one thing employers can count on is that Juan will be trying to solve the problem at work – instead of being productive. He will be using the phone and email, or even stepping away from work, stressed out, trying to solve the problem. For the employer, that’s a direct cost in terms of lost productivity, possible medical insurance claims, and other negative impacts of stress on the employee.

The likelihood of a personal financial emergency affecting employees is high.

The New Productivity Engine devotes an entire chapter to the subject of stress, underlining its importance in employees’ personal lives and in the workplace. One section outlines the stress levels on the Holmes-Rahe Life Events Scale. In terms of ‘Life Change Units,’ the death of a spouse ranks at 100, while a parking ticket comes in at 11. The higher the number, the higher the stress level on the individual and their overall health. A ‘Change in Financial State’ garners 38 Life Change Units, a significant impact.

With more than three-quarters of American workers living paycheck to paycheck, the likelihood of a personal financial emergency affecting employees is high. “And it’s not just people on the lower income level,” Kilby points out. “Of the people that earn over $100,00 a year, 30 percent of them are also on the financial edge all of the time.”

Cost of stress is over $300 billion a year.

While many employers might throw up their hands and wonder, “What can I do about it?” – Kilby proposes an elegant solution: a financial wellness program as part of the employee benefit package.
“Independent research from different sources notes that annual cost of stress to U.S. employers is in excess of $300 billion a year. To show the value, that would buy 1.875 million bottles of the world’s most expensive wine (a 1787 Chateau Lafite), or 60,000 24-karat gold toilets, or pay the annual salaries of 8.8 million dental assistants,” Kilby says.

Relieving employees of all stress is neither possible or desirable, Kilby agrees. But relieving them of much of their personal financial stress through a financial wellness program enables both a healthier lifestyle and increased productivity. “Everyone wins in that scenario,” he states.

Financial wellness programs increase productivity and profits.

With profitability closely connected to productivity in most organizations, it makes sense that increased productivity means higher profits, or at least lower costs. Financial wellness benefits help employees better manage their money, build up savings, and access personal financial services that will help them in times of personal financial emergencies.

David Kilby says that “Personal financial emergencies will happen to just about everyone at one time or another. We can’t do a lot to prevent them.” However, we can do something about the negative stress and lost productivity that can accompany the crisis.

The implementation of a financial wellness program to take the sharp edge off an employee’s financial emergency – and stress – will go a long way to keeping productivity up, costs down, and employees engaged.

– David Kilby