Filed under: Family Money, Personal Finance, Debt Assistance, Financial Education
The American Psychological Association on Wednesday released a study proving what most of us already know: money stresses us out. The most commonly reported source of stress is money, with 64 percent of people saying that it is a significant cause of stress in their lives. Money can impact your mood and your long-term health. In the short term, stress causes irritability, anger and depression. Over time, it can lead to high blood pressure and other physical ailments. Money problems lead to health problems.
This study also shows the impact of growing income inequality. In aggregate, 26 percent of adults reported that they feel stressed about money all of the time. But people with a lower income are twice as likely to say that their financial situation prevents them from living a healthy lifestyle than wealthy people. And this difference is new. The last time the study was completed in 2007, before the financial crisis, there was no difference in the way people in lower-income families (defined as less than $50,000 a year income) and higher-income families reported money stress. However, we now see dramatically different responses driven by income and the Great Recession.
Also, 75 percent of millennials reported that money is a significant source of stress, a reflection of the economic environment that greeted them after graduation. This is one of the highest rates in the study and is particularly high given that the younger generations tended to worry less about money during the last 50 years.
And women are definitely worrying more than men about money, across all generations: 30 percent of women feel stressed about money all of the time, compared to only 21 percent of men.
A Gloomy Picture
The results of this survey pain a bleak portrait of life after the financial crisis. Although the economy is growing again and unemployment has dropped, incomes for the working class just haven't moved. And the nature of employment has been changing dramatically. Minimum wage service jobs remain plentiful. Opportunities to work for a company that provides a retirement plan, stability and the opportunity for career growth have been replaced with freelancing gigs and side hustles. It is not a surprise that young mothers worried about their children, young adults entering the workforce and the working poor feel increasingly stressed.
Stress can also become a self-perpetuating cause of future problems.
Perhaps the saddest part of life after 2008 is that the cost of financial services remains so high, and the prospect of paying off debt remains a distant dream for so many people. With student loans, mortgages, auto loans and credit card debt, people can't imagine a world of progress. To help people create a plan and try to take control of their debt, I authored a free debt guide. If raising income remains a challenge, we should at least focus on cutting costs and eliminating fees and interest that only helps the banks, and not the wider economy.
I hope that we find a way to bring optimism back into the economy. A country that is increasingly stressed and increasingly worried about money can not continue to drive innovation and growth.
Nick Clements is the co-founder of MagnifyMoney, a price comparison website that helps you find the cheapest bank accounts, and the best interest rates on your savings and your debt. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K.
