The top causes of personal financial stress—they're not what you expect

In our sixth annual financial stress survey,¹ we asked people how they felt about their financial situations: 64% replied “good to excellent,” just over half said their situation was better than two years ago, and only 17% said it was worse. Sounds pretty good, right?

Wrong. Because a good financial situation isn’t the same as financial wellness. In fact, 68% of participants said their finances cause them stress, and 71% are worried about having financial difficulties. It's a totally different story. It’s like the difference between saying, “Hey, how are ya?!” and asking, “How are you feeling—really?”

So how do people feel about their finances—really? They’re so concerned about their financial situation that they spend time on their personal finances at work—with 49% saying they’d be more productive if they spent less time worrying about finances at work. These three financial worries top the list:

1   Retirement savings 

2   Emergency savings

3   Job security

While we can’t prevent people from worrying about job security, we can help them prepare financially should it become a real issue.

Almost half of those in our survey say they worry about their retirement savings a great deal—and yet these are people with an employer-sponsored retirement plan. When we ask why they’re not saving more for retirement, the top three reasons are:

1   Poor spending habits (self or spouse)

2   Debt in general (aside from credit card or student loan debt)

3   Credit card debt

Poor spending habits and debt combined with inadequate savings make a vicious cycle. Sixty percent of workers agree that creating a budget would reduce their financial concerns, and—given their spending and debt habits—following a budget could help break the cycle. Budget planning should help with the first issue, getting control of spending. With spending under control, it’s easier to prioritize paying off debt and saving money.

Saving for retirement is especially hard for people with student loans. Nearly half of the millennials who took our survey have student loans, and it’s driving the difficulty of their financial situations. When we ask people what’s keeping them from saving more for retirement, their top three reasons are:

1   Student loan debt

2   Credit card debt

3   Debt in general (aside from credit card or student loan debt)

With all that debt, it’s no wonder saving for retirement takes a backseat. People with student loans need education, guidance, tools—and a budget—to help them work to get their debt under control so they can start thinking about saving. 

Saving is hard, whether it’s saving for retirement or saving for emergencies. Almost 4 in 10 participants say they worry a great deal about not having enough emergency savings.

A quarter of participants have no emergency savings at all. Emergency savings do improve a bit with age, as 31% of Generations X, Y, and Z have no emergency savings, but only 16% of baby boomers are in that predicament.

It’s not for lack of understanding, as most people realize they should have at least six months’ earnings set aside for the unexpected. 

Fewer participants have the cash to cover a $2,000 emergency this year (59%) than last year (62%). When there isn’t enough cash, people turn to the following sources in an emergency:

• Credit cards
• Family or friends (borrow or gift)
• 401(k) or other retirement savings
• Banks or credit unions 

Financial stress can hit anyone, regardless of income or financial situation. And the stress is focused on the basics—spending, debt, and saving. If plan sponsors and financial professionals want to help participants save more for retirement, the basics are a good place to start. By adding budgeting, tracking spending, and debt management to your education and engagement strategy, you can help participants save for emergencies and retirement. When people are less stressed by their finances, “Great, thanks!” can be the answer to “How are you—really?”

1 John Hancock's sixth annual financial stress survey, John Hancock, Greenwald & Associates, 2019. A survey of more than 3,500 workers to learn more about individual stress levels, their causes and effects, and strategies for relief.