The Unexpected Effects of Debt – Learn How Debt Really Impacts Your Employees

According to the latest APA survey, Americans are some of the most stressed people out of any nation¹. In fact, Americans are 20% more stressed than the global average with 55% stressed every day. This means that more than half of your employees are likely feeling some type of stress while on the job.

According to the APA poll, your employees are worried about:

• Inflation and the resulting rise in prices of everyday items – 87%
• Supply chain issues – 81%
• Cost of healthcare – 71%
• Money and the economy – 65%

It’s not surprising that financial issues are so high on the list.

According to a survey by National Debt Relief², the simple act of being in debt increases stress and anxiety. Plus, those experiencing financial stress find the effects reach across their lives.

Money Management Behaviors Associated with Financial Stress

One of the most common ways that financially stressed individuals handle the problem is to ignore it. This is known as debt denial.

In other words, an employee knows they have a problem but refuses to look it in the eye. Some signs of debt denial include:

• Screening phone calls to avoid debt collectors
• Not opening bills
• Opening new credit cards when old ones reach their limit
• Using one credit card to pay another
• Only making minimum payments
• Having no idea how much is owed
• Believing everyone is in the same situation

These behaviors leave your employees in even more debt with the addition of late fees and interest charges. Additionally, even when not confronting the problem, employees still worry and this worry causes additional problems.

Medical Issues Associated with Financial Stress

According to the National Debt Relief survey, those with financial stress lose over 200 hours of sleep per year worrying about their debts. The APA³ has found that financial stress also causes problems like:

• Heart disease
• Diabetes
• Migraines
• Depression
• Eating disorders
• Substance abuse
• Stomach problems
• Psoriasis
• Cancer
• High blood pressure

As employees grapple with stress-related health issues, employers see the results in absenteeism and higher employee healthcare costs.

Keep Reading: Effects of Financial Literacy on Profitability

Self-Care Issues Associated with Financial Stress

According to the survey, those with financial stress are less likely to take care of themselves and do the things needed to reduce stress. For example, more than two out of three respondents quit doing the things they enjoy when financially stressed.

Additionally, financial stress keeps your employees from going on vacation, taking a date night with their spouse, or attending a family function such as a wedding. 

Other areas affected by financial stress include:

• Making poor food choices
• Failing to exercise
• Choosing alcohol or drugs as a way to relax

When employees don’t take care of themselves emotionally, they are not as productive at work. In one study, they found that those who didn’t take a vacation were 80% less productive⁴. 

Not Meeting Major Milestones Due to Financial Stress

Those experiencing financial stress are less likely to meet major milestones such as:

• Marriage
• Having children
• Buying a home
• Retiring

One recent study found that a one-year delay in retirement can cost an employer $50,000⁵. 

Financial Wellness Can Make a Difference

Your employees are clamoring for help. The survey found that three out of four respondents wish they had the tools and resources needed when they found themselves in debt. Offering a financial wellness program to employees does just that.

A program like Enrich offers employees the skills, tools, and resources needed to reduce debt and the stress associated with it. 

Employees will learn:

• How to talk to creditors and collection agencies
• Methods for paying down debt
• How to create a debt-reduction plan
• The differences in kinds of debt and which debt should be addressed first
• Budgeting skills
• The importance of an emergency savings fund
• Saving techniques

By providing employees with financial wellness benefits, you can help them increase their financial health and reduce their financial anxiety. Learn how a program like Enrich will help ease the impacts of debt for your employees.

1 - https://www.stress.org/stress-research

2 - https://www.nationaldebtrelief.com/how-debt-affects-your-mental-and-physical-health/ 

3 - https://www.apa.org/news/press/releases/stress/2014/stress-report.pdf

4 - https://www.forbes.com/sites/davidsturt/2017/05/19/4-reasons-you-will-save-money-by-not-skipping-your-summer-vacation/?sh=6055279ed0f2

5 - https://pensionmark.com/blog-post/when-employees-retire-matters-to-them-and-to-employers/