Results of The Purchasing Power® Financial Stress Survey - 2018, conducted by Harris Poll on behalf of Purchasing Power in December 2017, reveals that over 4 in 5 (87 percent) of those who are employed full-time or have a spouse employed full-time are at least somewhat stressed about their current finances. The online survey among over 900 U.S. adults who are employed full-time or have a spouse employed full-time provides new insight into the level of financial stress employees are experiencing, the causes of that stress, how it has changed over the past 12 months and what they expect it to be in 2018.
These insights come just ahead of Financial Literacy Month in April, a time when employers often are searching for new ways to help their employees gain control of their financial lives. According to the survey, 38 percent of those who are employed full-time or who have a spouse employed full-time said they have some financial stress today; nearly one-fourth (24 percent) reported they have a fair amount of stress; 14 percent stated they have quite a bit of stress and 9 percent indicated a great deal of stress.
“Although the U.S. economy is healthy and the stock market continues to rise, employees are still stressed about their finances. Many struggle to pay their household bills because financially-fragile employees don’t necessarily benefit from these trends,” said Scott Rosenberg, Purchasing Power president. “The reason employees have financial issues usually points to a lack of financial literacy. In some cases, employees with financial issues don’t have healthy financial habits, so they don’t know how to resolve their situation. With employees’ financial stress affecting an organization’s bottom line in terms of productivity, higher absenteeism and more healthcare claims, employers today are compelled to pay more attention to their employees’ financial wellbeing,” he added.
Causes of Financial Stress
Household bills are the major reason cited for causing financial stress among those who are employed full-time or who have a spouse employed full-time. Causes ranked as follows in the survey:
• Household bills (e.g. mortgage/rent, utilities and transportation) - 47 percent;
• Lack of funds to cover unexpected expenses (e.g., car repair, home repair) - 43 percent;
• Retirement planning (e.g., little or no retirement savings, no post-employment plan) - 37 percent;
• Healthcare expenses (e.g., deductibles, prescription costs, medical bills) - 34 percent;
• High credit balance - 30 percent;
• Accumulating credit card debt - 29 percent;
• Lifestyle changes (e.g., loss of/decrease in household income, family addition, increase in household occupants, elderly care) - 25 percent;
• Education (e.g., tuition, daycare fees, student loan payments) - 21 percent;
Financial Stress Over the Past 12 Months
When asked if their financial stress has increased, decreased or stayed the same over the past 12 months, 39 percent of full-time employees revealed that their stress level increased over the past 12 months; 46 percent said it stayed the same; and 16 percent report that it decreased.
Of those who reported their stress level had declined in the past 12 months, 57 percent said an increase in their household income contributed to that decrease; 50 percent indicated they had decreased the amount of their expenses (such as paying off balances and eliminating unnecessary services/activities) and 20 percent revealed they had used financial tools to help better budget their money.
Expected Financial Stress in 2018
Full-time employees were asked if they expected their financial stress level to increase, decrease or stay the same in 2018, compared to 2017. Nearly half (47 percent) expect their stress level to stay the same in 2018, while 34 percent believe it will decrease and 20 percent see it as increasing.
Unexpected Expenses in the Past 12 Months
The Purchasing Power® Financial Stress Survey - 2018 revealed that 74 percent of full-time employees experienced an unexpected expense in the past 12 months. Here are the most common types of unexpected expenses among those that incurred any:
• Vehicle repair/replacement - 57 percent;
• Medical (such as sudden illness or increase in cost related to pre-existing conditions) - 43 percent;
• Home repairs (such as roof, boiler, siding) - 40 percent;
• Replacing/upgrading major home appliance that stopped working - 29 percent; and
• Travel (funeral, visit sick relative, unexpected move) - 18 percent.
These employees were also asked how they paid for the unexpected expense they incurred in the past 12 months. They reported using the following methods:
• Credit card - 49 percent;
• Used emergency savings - 31 percent;
• Used money they planned to use for other household bills - 30 percent;
• Cash - 23 percent;
• Borrowed from family/friends - 13 percent;
• Took out a loan (payday, title, home equity) - 13 percent;
• Debit card - 13 percent;
• Sold something (such as jewelry, electronics, card) - 9 percent; and
• Borrowed from retirement savings (401K, IRA) - 7 percent.
When those who are employed full-time or who have a spouse employed full-time were asked if they have $2,000 in emergency savings for unexpected expenses (e.g., car breaking down, refrigerator needs replacing, unexpected health emergency that occurs), 59 percent said “yes,” with 41 percent answering “no.”
Full-time employees were asked to indicate how much money they have in emergency savings to cover the costs of unexpected expenses:
• None - 19 percent;
• Less than one month’s pay - 19 percent;
• One month’s pay - 8 percent;
• Two months’ pay - 9 percent;
• Three months’ pay - 11 percent;
• Four months’ pay - 5 percent;
• Five months’ pay - 2 percent; and
• 6 or more months’ pay - 19 percent.
According to Rosenberg, among the financial wellbeing programs that employers are now offering are financial education tools and resources; voluntary benefits such as financial counseling and programs that address short-term financial needs including employee purchase programs and low interest installment loans.
This survey was conducted online within the United States by Harris Poll on behalf of Purchasing Power from December 27-29, 2017, among 2,163 U.S. adults ages 18 and older, of which 763 are employed full-time and 952 are employed full-time or have a spouse that is employed full-time. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact .