Employee debt is hurting your workforce. Here’s how to help. Here’s what to know about employee debt, how it occurs and what you can do to lighten the load for your team.
Personal debt is a major issue for Americans, and it’s getting worse. According to the Federal Reserve, American household debt was at $16.9 trillion at the end of 2022, up $2.75 trillion from 2019. As the issue continues to grow, the responsibility of maintaining healthy personal finances falls on employers as well as employees.
How does employee debt occur?
According to EBRI’s 2022 Workplace Wellness Survey, 80% of employees are bothered by their debt level. But where does this debt originate?
Employee debt can occur from a number of different sources. Credit card debt is one of the foremost challenges for employees. According to the same EBRI survey, among employees with debt, 78% of those surveyed cited credit card debt as a ‘problem’ for their financial situation. Another survey conducted by LendingTree estimates that Americans owe a collective $986 billion in credit card debt.
Student loans and medical debt also pose a significant challenge. The U.S. owes over $1.6 trillion in student loan debt dispersed between around 43 million borrowers, according to data by Forbes. Meanwhile, data from the Kaiser Family Foundation estimates that 1 in 10 American adults owes some form of medical debt, and Americans’ collective debt totals at least $195 billion.
Addressing employee debt in the workplace
Employees with debt are three times as likely to suffer from depression, anxiety and general stress, according to AIMS Public Health, and these poor mental health outcomes have long been linked with poor performance at work. Employee stress costs an estimated $7,000 per employee per year.
However, the nature of debt means that your employees could be suffering in silence. A recent financial well-being index from TELUS Health found that while 2 in five workers felt overwhelmed by their debt, almost 75% of those surveyed had yet to reach out to their employers for help due to embarrassment.
It’s important that employers confront this issue head-on with accessible financial wellness tools. Providing a financial wellness solution increases workplace productivity and signals to your employers that their personal well-being is being cared for.
Workers gravitate towards the idea that their employer should play a role in relieving their debt. A 2022 Bank of America study found that 4 out of 5 employees say that their companies should be playing a role in their own financial wellness. The solution isn’t a simple paying off of debt but requires education and training in order to instill healthy financial habits in employees.
Best Money Moves could be the solution you’re looking for!
Best Money Moves is a mobile-first financial wellness solution designed to help dial down employees’ most top-of-mind financial stresses. With budgeting tools and personalized money coaching, users can easily receive comprehensive financial advice right from their phones.
Focused on user-friendliness, Best Money Moves is designed to bring financial wellness resources right to the fingertips of employees. Our dedicated resources, partner offerings and 700+ article library make Best Money Moves a leading benefit in improving employee financial wellbeing.
To learn more about Best Money Moves Financial Wellness Platform, let’s schedule a call. Contact us and we’ll reach out to you soon.
