Financial stress: First world problem or workforce plague?

What could people living in the richest country in history during the least threatening time known to man, possibly have to complain about? Plenty, it turns out. More and more working Americans report experiencing difficulties making ends meet: Paying their rent or mortgage, repaying student loans, and going about their daily lives.

Though commonly dismissed as ‘first world problems’, there is merit to the claims. Sure, modern day Americans aren’t dealing with tribal wars, extreme poverty and malaria, but the strain to stay the course financially is very real. We breakdown just how widespread financial stress is in the 21st century United States, and delve deep and realize the impact of the problem on our collective prosperity, mobility and even health.

The stressful numbers behind financial stress

Despite overall stress level declining, money continues to be the leading cause of stress for American adults, by a wide margin. Though higher among lower income households, this type of stress is also felt by individuals with a steady income – which 49% of workers described as ‘low’. In the same survey, 64% cited money as a significant source of stress. Some segments have it even worse – including 3 out of every 4 parents, millennials and Gen Xers reporting feeling financial strain.

Brace for even more bad news: That uneasy feeling isn’t fleeting. 72% report feeling stressed about money every single month, and 22% experienced extreme stress about money during the past month. It may be subjective, but think about whatever ‘extreme stress’ means to you – and draw your own conclusions.

Waiting to explode

All of that pent up stress, day in and day out, manifests itself in very negative ways. When money feels tight, we tend to make poor, shortsighted decisions – such as not saving. According to a Google Consumer Survey with MagnifyMoney, over half of Americans report having less than $1,000 in savings. A Harris Interactive + Purchasing Power survey paints a slightly better – but still alarming – picture, finding that 44% of Americans have less than $2,000 to fall back on. Even if the latter is true, $2,000 doesn’t go far in the face of emergency – not to mention, towards some much needed time off.

Is it any wonder? Constant strain makes it harder to save to begin with. This causes a snowball effect and a full-blown crisis, whereby 48% reported living paycheck-to-paycheck all the time. In a smaller study, that already-alarming figure stood at 78% – and that includes people making 6 figures. Living this way, there can be no long term planning nor asset building. All major life events or changes – whether joyous like going to college, or sad like losing a loved one – require loans.

Living with financial stress can affect other areas of life, too. One third of American adults report that money is a source of tension/conflict in their relationship, and 44% report worrying about money at work. In fact, 46% of respondents to a Harris Interactive + Purchasing Power survey said they spend between 3-6 hours/week handling personal financial issues while on the clock. This means that the average employer misses out on $5,000’s worth of productivity per employee, per year. Collectively, that’s $230 Billion USD Americans businesses lose every year. Smartly allocated, just imagine how that productivity could impact the state of the country’s economy, education, real estate market and the wellbeing of its citizens.

Which brings us to the most concerning data point: There’s a health toll to sustained stress. One in five surveyed reported skipping – or seriously considering skipping – a visit to their doctor, because of financial concerns. Long term, stress is associated with hypertension and heart disease. And it certainly doesn’t help that a cloud of uncertainty is hanging over healthcare, placing future care at risk and making it even more important to save for a rainy day.

Digging ourselves out

On top of all the alarming data cited, perhaps most worrying is that 22% of respondents feel they’re not doing enough to manage stress. Without action, there can be no change – but knowledge has to precede any steps taken. Newsflash: Artificial Intelligence can help you get there.

Then, it’s time for some real commitment. Liberating yourself from financial stress won’t happen overnight, unless you’re somehow lucky enough to inherit billions from a distant relative. For those not in that lucky group, it’ll take a series of measured steps, such as incremental saving (we recommend the automated kind), realistic budgeting, retirement planning, and a series of lifestyle tweaks you’ll hardly even feel. Before long, you’ll be considering investment channels.

If you’re stressed out about money despite earning an income, don’t let anyone dismiss it as ‘champagne problems’ (unless, of course, you’re spending it all on champagne).